UBA’s $500m Eurobond oversubscribed by 240%

.         It’s further validation of UBA’s Pan-African growth strategy –  Uzoka

OKEY ONYENWEAKU

In what appears to be another milestone, the United Bank for Africa (UBA) has dazzled investors with a qualitative investment grade Eurobond. The bank successfully raised USD500 million, though a debut Eurobond, which was 240% over-subscribed.

The significant investor demand reflects the strong global investor appetite for UBA’s credit and support for the Group’s pan-African financial services strategy.

The Global Offering is a five-year senior unsecured benchmark bond (144A/Reg S) listed on the Irish Stock Exchange and will further support the Group’s strategic vision, as it continues to grow its franchise across the continent and client segments.

The bond, which is rated by both Fitch (B, stable outlook) and S&P (B, stable outlook), matures in June 2022 and was issued with a coupon rate of 7.75%, priced at an effective yield of 7.875%. This pricing is seen by the global investor community as the best possible pricing for a debut issue from a financial institution of Nigerian origin in current markets.

The pricing was at par to the recent bond issue by the Federal Republic of Nigeria, which issued USD1 billion in February 2017. Investor interest was global, including the United Kingdom, Europe, Asia, the Middle East and the US.

Speaking on the offering, the Group Managing Director/CEO of UBA Plc, Mr. Kennedy Uzoka stated:

“This successful dollar-denominated offering further illustrates global investor confidence in the strong fundamentals of our Group. The USD500 million bond will complement our stable funding base and support the growth of our balance sheet and the overall business. More importantly, this medium-term funding will further enhance our strength in financing profitable, impactful projects on the African continent.”

Also commenting on the Eurobond, the Group CFO, Mr. Ugo Nwaghodoh said: “UBA’s debut global offering is another milestone for us. It is timely in the Group’s growth phase and aligns with our strategic plan to profitably grow the balance sheet, as we maintain our prudent risk management and benchmark asset quality ratios.”

The United Bank for Africa Plc is a leading pan-African financial institution, offering banking services to more than 14 million customers, across over 1,000 business offices and customer touch points in 19 African countries. With presence in New York, London and Paris, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross border payments and remittances, trade finance and ancillary banking services.

With recession banging hard on their doors, Nigerian banks have seen corporate performance dip a notch. Rising impairments and weaker asset quality attest to a brutish credit environment. But countering this narrative, the United Bank for Africa, has displayed unusual strength and vigour, having pushed past analyst’s expectation to post a sterling first quarter 2017 and year end 2016 performance.

UBA recorded N25.5 billion in profit before tax in the first quarter, ending March 31st 2017, compared to N18.1 billion achieved in the first quarter of 2016. The Group also recorded a profit after tax of N22.4 billion in the first quarter, an impressive 32 percent year-on-year growth compared to N17.0 billion achieved in the corresponding period of 2016. The group sustained its strong profitability recording an annualized 19.4% Return on Average equity (RoAE).

Driven by an unprecedented 43% year-on-year growth in interest income, the bank group recorded a 38% percent year-on-year growth in gross earnings to close at N101.2 billion for the three months period ending March 2017, compared to N73.7 billion recorded in the first three months of the year 2016.

In the same vein, the pan-African institution ended 2016 with an impressive 22 per cent growth in gross earnings and profits attesting to its corporate resilience.

The bank recorded 22 percent growth in gross earnings to N384 billion as at December 2016 from a comparative figure of N315 billion recorded at the end of the 2015 financial year, dousing concerns about the possible negative impact of the relatively low economic activity in Nigeria on the bank. In addition to the opportunities in the high yield government securities, rising adoption of electronic banking channels and strong franchise, UBA was able to leverage its expansive geographical footprint in recording this impressive earnings growth.

From January to December 2016, the Group witnessed a significant 32 percent growth in profit before tax to N91 billion compared to N68 billion profit recorded over the same period of 2015.

It’s profit after tax grew by 21 percent to N72 billion, from N60 billion recorded the previous year. The bank noted that its impressive performance was buoyed by considerable growth in both interest and non-interest income.

The bank paid a final dividend of 55kobo, having earlier paid an interim dividend of 20k to shareholders, bringing the total dividend for the 2016 financial year to N0.75. This represented a yield of 13.9%, based on the stock’s unit price of N5.40 on March 23, 2017 on the floor of the NSE.

The results, Mr. Kennedy Uzoka, Group Managing Director and Chief Executive Officer of the bank, said its resilience was reflected in the outstanding performance in an economy in depression.

“Considering the challenging operating environment, I am pleased with our profitability in the year; an impressive 32% growth in profit before tax to N91 billion. We improved on our cost-to-income ratio, closing the year at 63%, in line with our target. Notably, the N72 billion post-tax profit translates to 19% return on average equity, which is broadly in line with our guidance for the 2016 financial year”, Uzoka said.