UBA’s Foreign Operations Deliver 40% Of 2018H1 Profit

Management of the United Bank for Africa Plc, on Wednesday presented its audited financials for the half-year ended June 30, 2018, indicating marginal growth in earnings and profit, even as the board is offering 20 kobo dividend per share, just like it did in 2017.
The flat growth, notwithstanding, the group however had reasons to cheer, as it moved closer to achieving equilibrium in its operations, with its pan-African operations contributing a significant 40% of profit for the period, in line with the objective of achieving 50% earnings from offshore subsidiaries.
A statement by the group at the midweek said its banking operations span 20 African countries, besides having presence in global financial centres like London, New York and Paris. Through these and using diverse channels, it provides banking services to over 15m customers globally.
According to the result, UBA’s gross earnings rose 16% year-on-year to N258bn, up from N223bn in the corresponding period of 2017, with operating income at N168.5bn, compared to N161.8bn in the first half of 2017.
Despite the inflation-induced cost pressure during the period, Profit Before Tax stood at N58.1bn, while net profit improved to N43.8bn, compared to N42.3bn achieved in the corresponding period of 2017. The profit, translated to pre-tax and post-tax return on average equity of 23% and 17% respectively.
Commenting on the score-card, UBA’s Group Managing Director/Chief Executive, Kennedy Uzoka noted the declining yields environment in Nigeria and Ghana, two of the group’s core markets.
That notwithstanding, he said the group delivered double digit growth in gross earnings, demonstrating “the success of our digital banking initiatives and broader Customer-First strategies.”
“Our enhanced asset-liability management strategies improved asset yield and grew interest income by 21% despite prevailing yield environment. Our re-engineered sales structure provided the impetus for renewed retail deposit growth. I am particularly pleased by the 24% year-to-date growth in retail savings and current account deposits, underpining the increasing penetration of our digital offerings and the Group’s overarching goal of democratizing banking across Africa. We improved net interest margin to 7.4% in line with our 2018 target, notwithstanding strong competition for wholesale deposits and the impact of rising global interest rates on our foreign currency funding,” he concluded
Total Assets for the period grew 4.9% to N4.27tr, just as customer deposits rose by 6.1% to N2.9tr, compared to N2.73tr as at December 2017, even as Shareholders’ Funds remained strong at N496.3bn.
The board has declared an interim dividend of N0.20 per share for every ordinary share of N0.50 each held on the qualification date – Wednesday, September 5, 2018.
Also speaking on the performance, Group Chief Finance Officer, Ugo Nwaghodoh expressed the group’s optimism on the future of the business.
The marginal growth should be appreciated against the backdrop of the economic recovery and uncertainties in Nigeria, its biggest largest market, just as revenue from trade services was doubled, while growth electronic banking income climbed 24% up. This, he believes, is “a testament to our market share gain, which is driven by innovative offerings. Our foreign operations contributed 40% of Group’s profit, underlining the benefit of our Pan-African strategy.
“We sustained our asset quality, with cost of risk at 0.8%. Whilst the loan book declined by 6.5% due to prepayments from some customers in Nigeria and Ghana, we grew the overall balance sheet by 5% in the first half of the year. The Group’s capital adequacy ratio of 23%, Bank’s liquidity ratio of 48% and loan-to-deposit ratio of 57% all reinforce our capacity to grow, with ample headroom for risk asset creation,” Nwaghodoh said.