In what is an indication of the fact that it is beginning to reap juicier fruits from its diversification project began some years ago, figures released on Thursday by United Bank for Africa Plc for the first quarter ended March 31, 2017, shows that the contribution from its 17 subsidiaries across Africa amounted to 35% of gross earnings income.
The group recorded significant growth in interest and non-interest income as well as increased efficiency, with 43% year-on-year growth in interest income, leading to a 38% year-on-year growth in gross earnings to N101.2bn, compared to N73.7bn in the corresponding period of 2016.
This contributed to the N25.5bn in profit before tax, compared to N18.1bn achieved in the first quarter of 2016, while profit after tax of N22.4 billion in the first quarter, represented a 32% growth compared to N17bn achieved in 2016 Q1. The group sustained its strong profitability recording an annualized 19.4% Return on Average equity (RoAE).
Reacting to the performance, the group’s Managing Director/CEO, Kennedy Uzoka, expressed satisfaction with the performance for the period, despite the intensifying competition and a very challenging business environment.
According to him, “our performance in the first quarter of the year strengthens our optimism on economic and business recovery in Nigeria and many of our markets across Africa. More importantly, this result is evidence of efficiency gains in our pricing, balance sheet management and operations.
“Our businesses outside Nigeria continued to wax stronger, contributing 35% of our earnings. We remained prudent in risk asset creation growing net loans by 2% year-to-date, as we have continued to monitor development in key sectors of the economy to take advantage of emerging bankable opportunities in due time. Albeit the structural challenges that exist in Africa, the opportunities and returns are immense and compelling. We will deepen our penetration across our chosen markets, as we diligently execute our strategies for consistent market share gain.
“Driven by our balance sheet liquidity, we grew interest income by 43% to an unprecedented quarterly run-rate of N77bn. Buoyed by improving foreign currency supply in Nigeria, remittance and trade services fees almost doubled and foreign currency trading income grew by 148% year-on-year, as we leveraged our Customer First initiatives to gain market share in these offerings.
“More so, it is my pleasure to report that we made further progress in our consistent retail penetration, as reflected in the 12% year-to-date growth in retail savings and current account deposits. Notwithstanding the tight interest rate environment, we recorded a 30bps reduction in cost of funds to 3.4%, a positive result of our customer service-led approach to low cost deposit mobilization. As at Q1, low cost savings and current accounts (CASA) represent 80% of our deposit funding,” Uzoka explained.
Also speaking on the performance, Group CFO, Ugo Nwaghodoh, said the Q1 performance further proves the UBA’s resilience and very strong prospect of the business across its chosen markets, expressing satisfaction with the quality of the earnings, which reflects the bank’s focus on the core business of financial intermediation and transaction banking.
“We remain steadfast on our prudent and proactive risk management, which helps to minimize the impact of the macroeconomic pressures on our portfolio. Our non-performing Loan ratio stood at 3.95%, with a 136% provisions coverage, inclusive of regulatory risk reserve. We remain well capitalized and liquid to fulfill our growth strategy; 19.4% BASEL II capital adequacy ratio and 41% liquidity ratio, which present opportunity to explore the headroom in our low LTD of 61%,” Nwaghodoh said.