Investment banking giant- United Capital, last week presented its score-card for the first quarter ended March 31, 2019, suggesting that the revenue was constrained, just as management successfully kept cost in check. The report, however, suggests the need for the company to ensure its assets sweats more if shareholders are to smile at year-end, but that will be determined to a large extent by what happens in the remaining nine months of the year.
Gross earnings for the period dropped by N751.456m or 34.11% from N2.202bn in the corresponding first quarter of 2018, to N1.451bn. The most significant drop was the 71.35% decline in net trading income from NN111.353m in 2018 to N31.903m; followed by the N771.661m in investment income from N1.058bn, representing N286.807m or 27.09% drop. This was followed by fee and commission income which also slipped from N439.266m to N365.589m, with the rise in net interest margin from N106.549m to N182.716m not enough to wipe out the effects of the drops in other income sub-heads. Other income for the period declined by N194.543m or 65.65% to N101.788m from N296.331m; just as a net loss on financial assets at fair value through profit and loss stood at N2.387m, compared to the previous N190.761m gains.
Personnel expenses dropped to N246.391m from N303.106m; other operating expenses, however, rose from N306.433m to N399.305m; depreciation and amortization increased marginally to N30.085m from N36.858m; following which total expenses stood at N684.404m, as against N710.022m in the previous Q1.
Profit before tax, therefore, fell by N725.839m or 48.63% to N766.868m from the N1.482bn reported in the corresponding period of 2018; while income tax expense dropped to N122.699m from N238.633m. Net profit, therefore, dropped from N1.253bn to N644.169m, representing N609.705m or 48.63% decline. This translated to 11 kobo earnings per share, down from 21 kobo in the preceding Q1.