" /> > UBA maintaining a winning edge in hard times | Hallmarknews
Published On: Tue, Dec 13th, 2016

UBA maintaining a winning edge in hard times

 

Okey Onyenweaku

As markets strain against a gagging recession local banks have devised ingenious ways of staying in business. While a number of domestic money centre institutions have resorted to a variety of internal cost containment measures such as increasing the use of automated service provision, Pan African Banking Group, UBA, has opted to throw its sights afar from the Nigerian borders by wrapping up big ticket transactions with international business partners in a variety of African countries. A recent move in this direction was its tie-up with Attijariwafa Bank of Morroco.

Attijariwafa and UBA recently signed a Memorandum of Understanding (MoU) to strengthen their collaborative efforts in correspondent banking, investment funding, trade finance and project finance on the African continent.

The Chairmen of both banks Mr. Tony Elumelu, Group Chairman UBA and Mr. Mohamed El Kettani, Chairman and CEO of Attijariwafa Bank Group had carefully crafted and outlined key areas of cooperation between the two institutions.

The MOU states that both banks will organise business –to- business (B2B) missions to identify and develop business and investment opportunities, not only between Nigeria and Morocco, but across respective African networks.

Elumelu pointed out that the collaborative effort was,’… a historic milestone. As two groups with considerable footprints in Africa, we see huge potential in bringing our collective expertise in banking to provide Africa-led solutions to the needs of Africans.”

“Nigeria is the largest African economy and a leading commercial and financial hub in West Africa. It goes without saying that our group should collaborate with outstanding players, such as UBA Plc, to provide customized assistance to African and international companies to grow trade and investment flows, between not only Morocco and Nigeria, but also in all countries where our two groups are established’’, Chairman and CEO of Attijariwafa had said

” The MOU we just signed is a first but major milestone in a long-term partnership. It also heralds promising perspectives for African and international investors worldwide.

While this offers UBA the opportunity to remain and maintain its leadership position in Africa and beyond its unaudited third quarter financial results defied trend recording a 7 per cent year-on-year growth in profit before tax to N62 billion. The bank achieved this feat despite the challenging macro-economic environment.

This represents an impressive 18.2 per cent annualized return on average equity. The Bank recorded an appreciable growth in both funding and fee income lines. “I am pleased with our performance in the first nine months of the year. Notwithstanding the negative economic growth in Nigeria, we maintained growth in earnings and sustained our asset quality. Increasingly, we are leveraging our unique pan-African platform to drive new customer acquisition and grow market share across our African subsidiaries” said Kennedy Uzoka, Group Managing Director and CEO of UBA Plc.

Furthermore, the Bank’s level of impairment in its overall loan book was moderate. The Non-Performing Loan (NPL) ratio of 2.5 per cent and 0.9 per cent cost of risk remain one of the best in the industry.

UBA Plc’s third quarter results also revealed increasing skill  and efficiency in gains with appreciable growth in operating income by 11 per cent to N183 billion while profit after tax rose by 8 per cent to N52 billion within the period.

Whereas this was partly driven by the depreciation in the value of the naira, UBA also recorded a significant 21 per cent year-to-date growth in deposits and a similar 26 per cent growth in total assets. The bank was able to achieve flat cost-to-income ratio year-on-year at 65 per cent in the midst of external cost pressures.

The Bank maintained 43% liquidity ratio and 17.6 per cent BASEL II capital adequacy ratio, well ahead of regulatory requirement.

UBA proved its leadership in the industry, by showcasing another impressive performance for the year ended December 31, 2015. Its audited results for the period shows that the bank recorded a 10% growth in gross earnings, closing at N315 billion and a 25% growth in profit-after-tax which rose to N60 billion; translating to a 20% return on average equity. It also grew operating income by 10% to a record N205 billion in December 2015; from N186 billion in December 2014.

According to market analysts, this was no mean feat at a period when other banks were issuing profit warnings to signal troubled times. In the midst of shrinking revenues, foreign exchange crisis, Treasury Single Account (TSA), initial high CRR at 50% among other tough and tight macro-economic environment, UBA paid a final dividend of 40 kobo per share which brought to 60 kobo the total dividend for the 2015 financial year. UBA had earlier paid an interim dividend of 20 kobo per share, following the audit of its 2015 Half Year Results.

Apart from building a sound and strong institution, Oduoza’s leadership ensured that shareholders received decent returns on their investment, in terms, of dividend payouts. The bank has paid dividends consistently over the last six years except in 2011 when it posted a loss of N7.9billion, thanks to industry-wide huge toxic assets.

Its dividend history shows that the bank paid 10 kobo in 2010, 5 kobo in 2011, 50 kobo in 2013, 50 kobo in 2014 and 60 kobo in 2015.

Shareholders were impressed by the dividend payout, but prodded the bank tomatch payouts by peers such G T Bank and Zenith Bank. While G T Bank paid 177 kobo, Zenith Bank paid 180 kobo to their shareholders. Challenging as the operating environment may be, UBA has not looked back in expanding it’s off shore businesses.

The bank’s 19 subsidiaries, reportedly has contributed more than 28 per cent to the groups bottom line in 2015. In a depressed economy with very tight regulatory and fiscal regulatory authorities, the group’s foresight helped to cushion the sad effect.

FIVE YEAR PERFORMANCE

A critical assessment of the bank’s performance since August 2010 reveals that its profit grew by 2098 per cent from N2.167 billion to N47.475billion in 2015. Other relevant indicators also show that gross Earnings also grew by 57 per cent from N157billion in 2010 to N247.3billion in 2015. Similarly, its total assets grew 55 per cent from N1.432trillion in 2010 to N2.216 trillion in 2015. Loans and advances to customers also grew by 82 per cent from N569.3billion in 2010 to N1.036 trillion in 2015.

At a glance, UBA has performed impressively in the last 6 years. However, the bank must channel its efforts to tackle the challenge of huge crowd in the banking halls.

Whereas UBA has achieved some strategic ground with its subsidiaries after the initial challenges, when it retained most of its earnings to support them, stakeholders believe that its dividend package should compete with that of G T Bank and Zenith Bank. The banks dividend pay-out was much less than that of its peers.

United Bank for Africa Plc (UBA) is one of Africa’s leading financial institutions, with operations in 19 African countries and 3 global financial centres: London, Paris and New York.

From a single country operation founded in 1949 in Nigeria, Africa’s largest economy, UBA has emerged as a pan-African provider of banking and other financial services, to more than 8 million customers, through diverse channels globally.

‘’As of Dec 03, 2016, the consensus forecast amongst 13 polled investment analysts covering United Bank for Africa advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts improved on May 19, 2015. The previous consensus forecast advised investors to hold their position in United Bank for Africa.’’ Reckons financial Times

 

Facebook Comments

comments

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Recent posts

  • Arms seizure raises concerns over proliferation of security agencies at ports

    By FUNSO OLOJO The interception last Sunday by the Nigeria Customs Service of cache of high calibre arms made up of 661 units of brand new Tomado pump action rifles on the street of Lagos has once against raised serious concerns among the agitated industry stakeholders who have now renewed their calls for the review […]

  • Michael Ajayi: The bridge-builder bows out of NPA

    FUNSO OLOJO “I am a Marxist-socialist who believes that a common man deserves a better life”. That is the philosophy which underpins the life and actions of Chief Micheal Kayode Ajayi, the retiring General Manager of Nigerian Ports Authority(NPA). The ebullient image-maker of the super-rich government agency bows out of the organization this March after […]

  • N4bn 7UP loss exposes rot in real sector

    Okey Onyenweaku Seven up Plc, in a result that has kept investors shuddering, recently posted a mind-boggling N4.8b loss for the third quarter of the year 2016. The result, a total collapse from its 2015 third quarter profit after tax of N2.2b, signposts one of the worst operating performances for the carbonated soft drink manufacturer […]

  • Skye Bank crisis worsens

    …customers, shareholders’ express anxiety Okey Onyenweaku Against the background of an implosion in the earnings of commercial banks in Nigeria, Skye Bank Plc has again grabbed headlines for unsavory reasons. Indeed, emerging developments in the bank underscore a deepening operating and management crisis and has set up the stage for an epic battle to save […]

  • First Bank leads four Nigerian banks in Top 500 Global Banking Brands

        First Bank of Nigeria Limited has been named as the most valuable banking brand in Nigeria in The Top 500 Banking Brands of The Banker magazine of the Financial Times  and Brand Finance, London, United Kingdom for the sixth consecutive time.   According to a press release issued on Sunday by the Country […]

  • N4bn loss: Guinness Nigeria faces more challenges

    Okey Onyenweaku The once cheerful faces of shareholders of Guinness Nigeria Plc has suddenly turned gloomy as their company’s fortunes continues to fall into a never-ending hole. Unable to ride on the back of an increasingly weaker consumer market for alcohol, the company found its 2016 financial statement dipped in red ink as it posted […]

  • Forex crisis: $30bn loan in jeorpady

      Okey Onyenweaku Anxiety is beginning to cloud the possibility of international lenders to give Nigeria the $ 30 billion she needs to restructure her sagging economy. The Nation’s economy which slipped into a recession in the first quarter of 2016 has continued to deepen the government’s desperation for far reaching solutions. The recent drop […]

  • Anxiety over Banks’ year end results

    Okey Onyenweaku Anxiety has begun to drench the expectations of analysts and other stakeholders alike as they continue to fret over the release of year end 2016 results for banks listed on the Nigerian Stock Exchange (NSE). The anxiety of investors reflects the adverse impact a full year of falling gross domestic product (GDP) growth […]

  • Prospects of market recovery bleak

      .           Stocks lose N4trn in 3 years; Blue chips shed 47% value Okey Onyenweaku Nine years after the melt down of global financial markets in 2008, the Nigerian stock market has taken a frightening tumble as the Nigerian All Shares Index (ASI) dropped by an astonishing 60% or -10.7% per annum on a compound […]

  • NICON Insurance, micro finance banks sign MoU to boost Nigeria’s business frontiers

      NICON Insurance has signed a memorandum of Understanding with the National Association of Micro Finance Banks (NAMFB) in order to stem the harsh effects of economic recession on small scale businesses in the country. The pact, sealed by NICON with the umbrella micro finance body, composed of 978 members, is said to be targeted […]

  • Lloyd’s threat: Anxiety as AON struggles to save Nigerian airlines

    There is unease among domestic airlines in Nigeria following a threat by Lloyd’s of London, the world’s leading insurance market, to blacklist them over irregular payment of premiums. This is another unfortunate consequence of a biting economic recession Nigeria is currently undergoing which has among other things thrown the nation into acute shortage of foreign […]

  • Ports get harmonised support portal

      Maritime activities closed last Friday with the Nigerian Ports Authority (NPA) saying the nation’s ports are ready to absorb increase in imported vehicles expected from government’s ban on importation of vehicles through land borders. The Managing Director of NPA, Ms Hadiza Usman, gave the indication in Lagos to mark her 100 days in office. […]

  • NDIC, CBN set up committee to study digital currency

      The Managing Director, Nigeria Deposit Insurance Commission (NDIC), Alhaji Umaru Ibrahim, has said that the commission and CBN had set up a committee to look into the trending “digital currency, ‘Bitcoin’. Ibrahim said this at the ongoing 2016 Workshop for Financial Correspondents in Kaduna. The theme of the workshop is “Economic Recession and the […]

  • Rice smuggling thrives in spite of ban

      The smuggling of rice through the land borders has continued to thrive in Badagry area of Lagos State in spite of the Federal Government’s ban on the practice. Markets along Badagry Expressway close to Seme border, are stocked with various varieties of smuggled rice, especially as the Christmas season approaches. A smuggler, who identified […]

  • Ugwuanyi’s fate hangs in the balance as Appeal Court fails to decide

    The protracted legal tussle between the Enugu State governor, Hon. Ifeanyi Ugwuanyi and former senator representing Enugu North senatorial zone, Ayogu Eze is poised to last longer than anticipated as the Appeal Court sitting in Abuja and presided over by Justice Tinuade Akomolafe-Wilson last week Thursday, reserved judgment on an appeal filed by Eze seeking […]

  • Hallmarknews Backpage

    On November 8, 2016 Americans elected Donald Trump as their 45th president.  By the time you’re reading this, Mr. Trump would have named all his nominees for leadership of various government departments. The president-elect, who will be inaugurated on January 20, 2017, has not only unveiled the lineup of his cabinet, he has also specified […]


Take a Poll

Please wait...

Subscribe to our newsletter

Enter your email address and be the first to know when our article is published.