Tunde Segun Jeariogbe
Quarter Under Preview: Half Year
Current Share Price: N43.00
Latest Interim Dividend: N0.25
Estimated Beta Value: 0.61x
Estimated Intrinsic Value: N40.44
The Group
United Bank for Africa Plc is a financial services group in sub-Saharan Africa with presence in Africa, the United Kingdom, the United States, and France. The Company is a financial institution offering a range of banking, pension fund custody and other financial services to customers in retail, commercial and corporate segments of the African market. The Bank’s segments include Corporate Banking, Retail/Commercial Banking, and Treasury and Financial Market:
Financial Performance
At the end of the half-year 2025 business session, the management of UBA reported 18.01% growth in its Gross Earnings from the N1.37 trillion in the corresponding period to N1.618 trillion in the current year. Operating Expenses increased marginally by 8.00% to stand at N485.16 billion as against N449.21 billion in the previous quarter. Profit for the Period is currently estimated at N335.53 billion, as against N316.36 billion in the corresponding period of last year. Nevertheless, due to the huge difference in the Exchange rate on translation of foreign operations within the periods compared in this report, Total Comprehensive Income dropped by 35.12% to N670.66 billion compared to N1.033 trillion achieved in the comparable period of 2024:
Total Assets is currently estimated at N33.268 trillion, which is 17.40% higher than the estimated value at the end of 2024 half year. Meanwhile, Total Liabilities grew by 14.59% mainly enhanced by the improvement in the total Deposit for the period. Net Assets of the bank remained positive, rising by 41.25% to N4.216 trillion as against N2.985 trillion in the 2024 full-year. The management seemed cautious in its loans and advances through the period, judging by th fact that this only appreciated by 10.68% to N7.74 trillion as against N6.997 trillion at the end of 2025.
Profitability Ratios
Operating Expenses to Gross Earnings ratio dropped marginally by 8.48% from the previously estimated 32.76% to 29.98% this is an indication that the business was more efficiently run through the period compared to the corresponding business session. Thus, we can say that profit improved from the previous half year. Similarly, Gross Earnings to Total Assets ratio improved by marginal 0.52% while Loan to Deposit Ratio stood closely by 6.94% drop. See the below table for details:
Investment Ratios
Note that due to the rights Issue done within the two periods under review, the shares outstanding in the name of UBA Plc changed from 34,199,421,368 shares to 41,039,305,642 units. Consequently, the estimated Earnings Per Share for the period dropped to N8.18 from N9.25 each, despite the slight increase in the profit for the period.
As noted above, the Total Comprehensive Income dropped by 45.93% to stand at N16.34 against N30.22. The said EPS is same as 18.50% of the current market price as at the time the result was released. The Book Value per share stood at very attractive price of N102.74 from N87.29, this is a good performance and confidence boosting outing.
Interim Dividend
Far below investors’ expectation, the management of UBA adopted a conservative approach, announcing a N0.25 interim dividend for the period, representing a 87.50% drop from the previous N2.00 paid last year, in what may not be unrelated to the group’s ongoing quest for fresh capital injection from existing shareholders. The said interim dividend is only 3.06% of the total amount earned for the period. We are of the opinion that the conservative approach will enable the financial institution take advantage of emerging opportunities in its industry. In other words, we expect a better dividend position at the end of the ongoing financial year:
Recommendations:
The decline in EPS and Earnings Yield shows some profit pressure, so cautious monitoring is needed. Despite this earnings slash, the market still valued the stock higher, indicating a measure of investor confidence, or a situation of limited alternative investment outlets. Long term-oriented investors should consider gradual accumulation, while short term investors should watch profitability trends. If EPS keeps declining, it may drag price performance along.
