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In spite of a strong performance in the second quarter, United Capital Plc, a Lagos-based investment bank, saw a decline in its half-year profit on the heels of a drag in revenue.
The investment bank posted a profit of N1.67 billion for the half-year period to June 30, 2019. Compared to the same period last year, it made some 17 percent less profit.
Earnings scorecard of the investment bank shows it made N644 million as profit in first quarter and N1.02 billion in second quarter, with the latter performance representing a 58 percent growth over its first three month. Year-on-Year in second quarter, United Capital has grown its profit by 27 percent.
“We did deliver on our promise to improve performance in Q2 2019 and as can be gleaned from our numbers we had a good outing in the quarter under review”, Peter Ashade, Group CEO, United Capital said in a note to investors.
Ashade said the inauguration of cabinets across states of the federation would see the pace of bond and commercial paper issuance pick up, increasing the investment bank’s advisory fee, while the group would adopt initiatives to improve top lines and profitability.
“We would be going into the second half of the year 2019 stronger” he added.
United Capital made 16.53 percent less revenue as figures fell to N3.24 billion in the period compared to N3.88 billion last year. In the second quarter revenue fell by 1.16 percent.
Operating income declined by 8.95 percent year-on-year, to N2.82 billion in the half-year period in 2019. This was due to a 4.81 percent decline in Investment income while Fees and Commission income fell 16.99 percent.
The investment bank’s net trading income plunged 57 percent while net interest margin rose 12.94 percent.
Dividend income rose 16.36 percent to N366.92 million while income from other sources fell 88 percent, weighing on United Capital’s other income which declined 44.64 percent to N419.89 million in the period.
United Capital saw its total expenses by 15.81 percent to N1.25 billion on account of a write back of N180 million compared to impairment allowance of N73.62 million last year.
Profit before Tax dipped by 16.98 percent. For the second quarter, however, PBT grew 27 percent from a year ago on the back of cost saving strategies which saw other operating expenses reduce 16 percent year-on-year in second quarter.
Given the decline in profit, earnings per share fell to 28 kobo in the review period from 34 kobo last year.
So far, Total assets of United Capital has declined 5 percent to N141.30 billion as at June 30, compared to N148.70 billion as at December 31 2018.
Total liabilities have fallen by 6 percent in the period to N124.97 billion while Shareholders’ fund has grown 3 percent to N16.33 billion.
Shares of United Capital fell 0.91 percent to close at N2.18 per share on Friday, and have lost 24 percent yearlong underperforming the benchmark index that is down 11 percent.
SEGUN ADAMS
