• Substantial IT Investments Yielding Tangible Results- Alawuba
• We’re Committed To Sustainable Revenue Growth – Nwaghodoh

Ahead of the unveiling of its capital raising exercise to meet the new capital base announced by the Central Bank of Nigeria (CBN), the board of United Bank for Africa Plc, on Monday presented its unaudited financials for the nine-month ended September 30, 2024 through the Nigerian Exchange (NGX).

Highlights of the result included the significant 83.2% growth in gross earnings to N2.398tr, up from N1.308tr recorded in September last year, driven primarily by the 169.98% rise in interest income for the period, which could not be replicated in the profit after tax, owing to the 118.97% increase in total operating expenses and 211.62% growth in interest expense. Net profit could only rise by 16.92%.

According to the result, interest income stood at N1.759tr, after improving by N1.132tr from N666.291bn to N1.798tr, lifted by the interest income on amortised cost and FVOCI securities, which grew to N1.759tr, from N665.478bn. Abreakdown of the figures showed that term loans to corporates contributed N539.074bn from N231.747bn; followed by investment in bonds at N456.212bn from N195.213bn; and treasury bills that yielded N294.277bn from N99.236bn. Loans and advances to banks contributed N118.925bn from N27.308bn, among others. Interest income on Financial assets at Fair Value Through Porfit or loss securities improved from just N813m in the corresponding period of last year to N39.322bn.

Interest expenses rose from N223.209bn to N695.571bn, an increase of N472.362bn or 211.62%, of which N404.995bn was paid on customer deposits, compared to the previous N160.041bn; followed by the N207.052bn paid on deposits from banks, up from N30.669bn; while borrowings cost N80.927bn from N28.58bn in the prior nine months. This resulted in net interest income of N1.103tr from the previous N443.082bn.

Fee and commission income leaped to N392.839bn from N182.317bn, boosted by the N144.487bn electronic banking income, up from N75.746bn; ahead of commissions on transactional services that yielded N90.018bn from N33.313bn; and N42.716bn in credit-related fee and commissions, which increased from N16.366bn among others. Fee and commission expenses closed at N158.986bn, up from N68.031bn; helped by the N135.415bn paid as electronic banking expenses, from N61.161bn; and the N16.865bn from trade related expenses, up from N5.76bn. Net fee and commission income, therefore improved from N114.286bn to N233.853bn.

Net trading and foreign exchange income fell to N182.484bn from N450.253bn, after the N243.376bn net fair value loss on derivatives, compared to the N339.857bn gain reported in the prior nine months; the effect of which was mitigated by the N251.366bn foreign exchange revaluation gain, rising from N32.594bn, Fixed income securities also contributed N83.103bn, up from N49.316bn; justas foreign  exchange trading income rose from N28.386bn to N91.391bn.

Other operating income climbed to N23.785bn from N10bn, with other income amounting to N13.009bn from N5.272bn; and dividend income of N10.509bn from N4.43bn. Net monetary loss on hyperinflation stood at N4.282bn from nil in the previous nine months. Total non-interest income, therefore, fell to N435.84bn from N574.539bn.

Operating income, therefore grew to N1.539tr from N1.017tr; net impairment charge on loans and receivavbles droped from N144.616bn to N123.479bn. A breakdown shows that impairment charge on loans to customers amounted to N142.495bn from N138.428bn; while recoveries on loans writter off increased from N12.217bn to N18.238bn; while impairment reversal on other assets stood at N3.583bn from a charge of N1.224bn. Impairment charge on investment securities improved from N8.342bn to N2.399bn; just as write-off on loans and advances dropped to N1.241bn from N5.758bn. This left net operating income after impairment loss on loans and receivable at N1.415tr, as against the previous N873.005bn.

Employee benefit expenses rose from N111.107bn to N225.418bn, with waes and salaries being N216.035bn, from N106.772bn; depreciation and amortisation rose to N33.823bn from N22.611bn. Other operating expenses stood at N552.961bn, after growing by N414.288bn from N237.196bn, of which fuel, repairs and maintenance took the lion’s share of N104.073bn, up from N45.667bn. This was followed by the N70.325bn paid as banking sector resolution cost paid to the Asset Management Corporation of Nigeria (AMCON), up from N30.917bn; and the N34.205bn paid as deposit Insurance premium to the Nigeria Deposit Insurance Corporation (NDIC). Total operating expenses increased from N370.914bn to N812.202bn.

Profit before tax for the period amounted to N603.483bn, up from N502.091bn; while income tax expense grew from N52.795bn to N79.17bn; resulting in a net profit of N525.313bn, compared to the previous N449.296bn.

The group also reported exchange differences on translationg of foreign operation totaling N789.483bn, up from N276.129bn; following which total comprehensive income for the period amounted to N1.633tr from N886.808bn;  which translated to an Earnings Per Share of N14.78, compared to the previous N12.93 each.

On the balance sheet, total assets soared to N31.801tr, from N20.653tr; driven by the cash and bank balances of N9.108tr from N6.069tr as of December 31, 2023; followed by customer loans and advances amounting to N7.675tr, up from N5.228tr; among others.

Total liabilities increased from N18.623tr to N28.215tr; boosted by customer deposits of N22.968tr, which was almost double the previous N14.891tr; following which equity attributable to shareholders stood at N3.465tr, compared to the previous N2.03tr.

A statement by the group quoted the Managing Director/Chief Executive Officer, Oliver Alawuba, as expressing pleasure at the group’s strong and sustainable growth in its various revenue streams, building on its strong performance earlier in the year.

The strong growth in key metrics of the group’s business, he noted is “despite the persisting macroeconomic headwinds, geopolitical tensions, insecurity, inflationary pressure and exchange rate volatilities across our markets.”

The bank’s performance, he continued, has been underpinned by consistent strong growth on all core and sustainable banking income lines, even as its “substantial investments in technology are yielding tangible business value. This commitment is instrumental in delivering enhanced customer experiences and optimizing operational efficiency.”

Commenting on the performance, UBA’s Executive Director, Finance & Risk, Ugo Nwaghodoh, also expressed delight “at the milestone reached in driving operational efficiency, reflected in cost-to-income ratio normalizing around the 50% range. Shareholders’ funds recorded a 77% growth from N2tr at Full Year 2023 to N3.59tr, demonstrating the Group’s significant capacity for future growth.”

On plans to consolidate its performance for the rest of the 2024 financial year and beyond, Nwaghodoh said the group remains “on track with various strategies to optimize our cost of funds and operating expenses. Furthermore, the Group has finalized plans to shore up its share capital to support its medium to long term aspirations, whilst aligning with the recent regulatory requirement in Nigeria and other jurisdictions.”

UBA, he stressed, remains committed to sustainable growth in its core banking revenue lines and maintaining its strong compliance and risk management culture, even as the Group identifies further opportunities to expand.