Kennedy Uzoka, Group Managing Director of the United Bank for Africa (UBA)Plc, says the performance score-card for the year ended December 31, 2017, is indeed a testimony to the wisdom in the board’s decision to diversify across Africa as a strategy to reduce its exposure to risk in Nigeria at a time when oil price remains volatile and the domestic operating environment could be better.
In statement, following the release of the audited result on Friday, showing a 20% growth in gross earnings and the proposal of a 65 kobo dividend per share, Uzoka said the strategy entailed expanding across Africa and in the process diversify revenues and capture the broader business opportunities inherent across the continent.
Furthermore, he was quoted as saying “the results reinforce the sustainability of our business model and the capacity to deliver superior long-term return to shareholders, as the economic and business environment improve.
“In 2017, we made strong progress in our strategic initiative of dominating transaction banking across all our countries of operation, gaining market share in all lines of our business. Even as the non-oil sectors of our largest country of operation, Nigeria, remained relatively weak, we still grew earnings by 20% to N462 billion, a third of which is attributable to non-funded income,” he added
Also commenting on the score-card, UBA’s Group Chief Finance Officer (GCFO), Ugo Nwaghodoh said the performance is even better appreciated against the backdrop or the current high interest rate regime, despite which UBA “achieved a relatively low 3.7% cost of funds.
“This operational efficiency reflects the benefit of our rich pool of stable savings and current account deposits. The net interest margin stabilized at 7%, even as yields on treasury assets dropped in the last quarter of 2017. Our core transaction banking offerings gained strong momentum, with income from these business lines growing by double digits.
“We remain committed to our responsible approach to balance sheet management, with focus on growing risk asset and broader balance sheet in a profitable and prudent manner. Amidst a subdued Nigerian credit market, we grew our loan portfolio by 10%, leveraging our robust liquidity and capitalization to support good businesses through this challenging economic cycle. We closed the year with a Basel II capital adequacy ratio of 19% and a liquidity ratio of 50%, well ahead of 15% and 30% regulatory requirement respectively. Our disciplined approach to lending and broader risk management continues to uphold our asset quality.”
According to the result, gross earnings grew to N462bn, up by 20% from N314bn recorded in the corresponding period of 2017, even as the group delivered 16% year-on-year growth in profit before tax of N105bn, compared to N90.6bn in the 2016 financial year. The Profit After Tax also climbed to N78.6bn, an 8.8% year-on-year growth compared to N72.3bn in 2016.
Also noteworthy, the statement continued, was the fact that UBA subsidiaries outside Nigeria contributed a third of the group’s top-line and 45% of profit for the year, which it described as a remarkable improvement from the 31% made in 2016.
This, it added, affirms the success of UBA’s expansion strategy, with target of 50% contributions by 2020.
Operating Income rose to N326.6bn, 20.6% better than N270.9bn in 2016, which it said affirms the group’s capacity to deliver strong performance through varying economic cycles and challenging business environment.
The audited results also showed that Total Assets peaked at N4.07tr, translating into 16.1% year-on-year growth from N3.5tr recorded as at 2016 financial year, just as net loans achieved a prudent 9.7% growth at N1.65tr, while the customer deposits grew to N2.73tr, representing 10% YoY growth on N2.49tr recorded in 2016 financial year.
Reflecting a strong internal capital generation, the Bank’s shareholders’ fund also soared 18.2% to N529.4bn in the 2017 financial year.
Subject to shareholders’ approvals, the board proposed a final dividend of 65 kobo per share, in addition to the 20 kobo interim dividend per share for the 2017 half year, bringing total dividend payout for 2017 to 85 kobo each.
UBA Plc, founded in 1949 in Nigeria, today boasts of about 10m customers globally; 632 business offices, 1,750 ATMs, some 13,500 PoS, and a robust online and mobile banking platform.
“UBA was the first Nigerian bank to make an Initial Public Offering (IPO), following its listing on the NSE in1970. It was also the first Nigerian bank to issue Global Depository Receipts (GDRs). The shares of UBA are publicly traded on the Nigerian Stock Exchange (NSE) and the bank has a well-diversified shareholder base, including foreign and local institutional investors as well as individual shareholders,” the statement stressed.