The board of United Bank for Africa Plc, on Friday, presented the unaudited result for the nine-month ended September 30, 2020, highlights of which were the marginal increase in interest income and expense, while net interest income rose at a faster pace. Other operating income dropped by 28.14%; just as operating income climbed 10.45%; while net impairment loss on loan and receivables soared by 72.23% from N6.663bn to N11.476bn.
It is noteworthy that the directors did not include the contributions from its various operating segments- Nigeria, Africa, and others in the breakdown, unlike in previous scorecards.
According to the results, gross earnings income grew by 5.98% from N428.742bn to N454.393bn; with interest income improving by 6.46% to N317.142bn, compared to N297.903bn, while interest expense dropped also by a marginal 5.66% from N138.989bn to N131.12bn. Net interest income increased by 17.06% to N186.022bn, as against N158.914bn in the corresponding period of last year.
Fee and commission income stood at N85.011bn, as against the previous N86.53bn, led by electronic banking income of N27.867bn, compared to the previous N26.707bn; trade transactions income increased from N10.843bn to N13.888bn. Commissions on transactional services dropped marginally from N13.393bn to N13.052bn; while credit related fees and commission tumbled from N13.494bn to N8.924bn. Fee and commission expense increased by 23.8% from N23.236bn to N28.766bn, boosted by N24.237bn e-banking expense, which rose from N19.92bn; net fee and commission income therefore dropped by 11.14% from N63.294bn to N56.245bn.
Net trading and foreign exchange incomes for the period under improved by 28% to N45.721bn, compared to the N35.72bn in the 2019 third quarter; just as ‘other operating income’ fell by 28.14% to N5.796bn from N8.066bn in the corresponding period of last year.
Total non-interest income at N107.762bn, was flat, when compared to the N107.08bn of last year; operating income, at N293.784bn, stood 10.45% better than the previous N265.994bn.
Impairment loss on loans and receivables soared by 72.23% from N6.663bn to N11.476bn, driven primarily by the impairment charge on loans and advances to customers, which dropped to N6.947bn, from N11.183bn. It was followed by the N3.548bn write-off on loans and advances, a significant increase over the N1.31bn of last year; and the N2.697bn impairment charge on off-balance sheet terms, as against the previous N1.903bn reversal. The bank also recovered N2.702bn from previous loans written off, down from N3.273bn, resulting in net operating income after impairment loss on loans and receivables improved by 8.86% from N259.331bn.
Employee benefit expenses rose 20.67% from N55.204bn to N66.617bn; depreciation and amortization rose 23.82% from N11.606bn to N14.371bn; while total operating expenses rose by 19.2% from N161.621bn to N192.659bn.
Profit before tax fell by 8% from N98.233bn to N90.372bn; tax charge dropped by 20.26% from N16.605bn to N13.24bn, mitigating the profit after tax decline to 5.51% from N81.628bn to N77.132bn. This represented drop in Earnings Per Share to N2.16, as against the previous N2.32 each.
The balance sheet however grew healthier in the period under review, after total assets improved by 42.31% from N4.96tr to N7.056tr, of which customer loans and advances rose from N2.061tr to N2.382tr.
Total liabilities improved to N6.404tr from N5.006tr, the bulk of which as the customer deposits at N5.202tr, from N3.832tr; following which shareholders’ funds rose 17.96% up from N555.528bn from N655.327bn.
A statement by the group on Friday quoted the Group Managing Director/Chief Executive, Kennedy Uzoka, as saying the result was despite “the current turbulence in the operating environment, occasioned by the global pandemic, we have continued to record significant progress in our business segments.”
The group’s Direct Sales Agents, Agency Banking Network, and Digital Banking propositions, he noted, positioned it “at the forefront of financial inclusion across geographies where we operate.”
During the period, he said the bank was provided support to customers, assisting them to navigate the negative impact that Covid-19 pandemic has had on livelihoods, businesses and social life, offering transaction fee waivers to customers “since March 2020.”
The group, he continued, “also rescheduled loans where business cashflows have been impacted, and donated generously to governments and communities to help catalyse a comprehensive pan-African response to the fight against the COVID-19 Pandemic.”
Uzoka said the for the rest of 2020 is expected to remain challenging, but that UBA’s diversified model is sufficient, “enabling us to continue to delight our customers with innovative banking products within our robust risk management framework.”
Commenting on the bank’s financial performance and position, the Group Chief Finance Officer, Ugo Nwaghodoh noted the substantial growth achieved “in the underlying business. “As we deploy rigorous balance sheet management strategies to protect our margins, we will sustain cost discipline to push cost-to-income ratio to our desired sub-60% target in the short-term. The Group continues to target 15% loan growth, a NIM of >6.0%, and ROE of >16% for the 2020 financial year, but targets remain subject to the evolution of the COVID-19 pandemic and its implications on the operating environment”, he explained.