UBA: Uzoka announces bumper harvest

FELIX OLOYEDE |

As the economy continues to show signs of gradual, though feeble recovery, Corporate Nigeria is tapping into the tentative growth to demonstrate strength in adversity. The impressive results which some of the companies have delivered in the half year ended June 2017 signal that the second half of the year may be quite good. Last week reports of the United Bank for Africa (UBA) and Access Bank which hit the bourse projected further optimism for Nigeria’s banking sector.
While the management of UBA gave hope to shareholders with 66 per cent growth in profit and dividend of 20kobo, Access Bank sent investors smiling to the banks with profit before tax increase of 17 per cent and an interim dividend yield of 25 kobo.
In a year of recession, UBA grew its gross earnings for the period by 34.5 percent to N222.7 billion, as against N165.6 billion reported in June 2016.
This impressive performance, which reflects the strong momentum of UBA’s business and its increasing share of customers’ wallet, was driven by the 44.3 per cent and 16.0 per cent growth in interest income and non-funded income respectively. The Group’s operating income stood at N161.8 billion, compared to N116.2 billion recorded in the corresponding period of 2016, representing a 39.2 percent growth.
The bank grew its gross earnings for the period by 34.5 percent to N222.7 billion, as against N165.6 billion reported in June 2016. This impressive performance, which reflects the strong momentum of UBA’s business and its increasing share of customers’ wallet, was driven by the 44.3 per cent and 16.0 per cent growth in interest income and non-funded income respectively. The Group’s operating income stood at N161.8 billion, compared to N116.2 billion recorded in the corresponding period of 2016, representing a 39.2 percent growth.
Pushing against the stormy economy the bank was still able to deliver a sterling Profit Before tax (PBT) of N57.5 billion, representing a significant growth of 65.5 percent over N34.8 billion recorded in the corresponding period of June 2016.
The Group also recorded an unprecedented Profit After Tax (PAT) of N42.3 billion, translating to a 56.2 percent growth over the N27.1 billion recorded in the half-year of 2016. This profitability further reflects the earnings capacity of the Group and its capability to progressively deliver superior returns to shareholders.
While the Group closed the half year with Total Assets of N3.69 trillion, a growth of 5.3 percent, it prudently grew gross loans to N1.6 trillion, a 4 percent growth when compared to the Group loan book as at 31 December 2016.
Reflecting a strong capacity for internal capital generation, the Group’s Shareholders’ Fund grew by 8 percent to N483.1 billion, whilst it delivered an annualized 18.2% return on average equity (RoAE) and an Interim Dividend of N0.20 per Share.
Impresssed with the result, Kennedy Uzoka, the Group Managing Director/CEO, said that “the results again demonstrate the strong momentum of the Bank, as we deliver continuous improvement across our businesses and key performance metrics.”
”The Bank’s unwavering focus on customer service excellence is translating to strong operational and financial efficiency gains. We have achieved better pricing on assets and liabilities, leading to continued improvement in the net interest margin to 7.3%. Leveraging our service-focused strategy and treasury management, we grew non-interest income by 17% year-on-year, reinforcing our transaction-banking-led approach towards deepening financial inclusion in Sub-Saharan Africa, ” Uzoka stated
According to him, UBA has made considerable progress in its retail banking penetration, gaining market share in deposits, at a time when a sizeable percentage of households are challenged due to inflationary pressures on disposable income. The Bank grew its retail savings and current account deposits by 23% and 5% YTD respectively.
Also speaking on UBA’s financial performance and position, the Group CFO, Ugo Nwaghodoh said that the Bank had “a strong start in the year, despite protracted recession in Nigeria, our largest market. Our profit after tax of N42 billion translates to 18.2% return on average equity, broadly in line with our 2017FY guidance.”
He explained that the Bank’s African subsidiaries (ex-Nigeria) contributed 32% of the Group’s earnings, leveraging on digital offerings to gain market share across the different markets.
“We maintain our discipline of banking only quality and profitable assets, a conservative stance which reflects on our asset quality. Notwithstanding consistent liquidity mop-up by the CBN, we maintained an average balance sheet liquidity ratio of 42%. Further reinforcing the Bank’s capacity is the strong BASEL II capital adequacy ratio of 20%, which underpins our ability to grow, as the macro risks decline, he said”
United Bank for Africa Plc is a leading pan-African financial services group, with presence in 19 African countries, as well as the United Kingdom, the United States of America and France.
UBA has carefully cultivated its strategies to increase its market share in most of those countries.
Tony Elumelu, the then managing Director of Standard Trust Bank, brazenly acquired UBA, a conservative and, according to analysts, traditional bank, towed it away from a frozen disposition to a high flying financial services provider with the ambition to spread into every nook and crannies of Africa and beyond.
Ever since, UBA has not looked back. The pan African Bank has proved that determination and focus pays. Today UBA is one of the dominant financial service provider in the African continent.
With a culture of aggressive marketing, the new UBA finetuned and brought in a culture of modern banking trend which was entirely new to Nigerian but turned out to be effective and made many financially literate
Five years on the profit march
A critical assessment of the bank’s performance since August 2010 reveals that its profit grew by stunning 3,234 per cent from N2.167 billion to N72.264billion in 2016. Other relevant indicators also show that gross Earnings grew by 144 per cent from N157billion in 2010 to N383.6billion in 2016. Similarly, total assets grew 144 per cent from N1.432trillion in 2010 to N3.504 trillion in 2016. Loans and advances to customers also grew 144 per cent from N569.3billion in 2010 to N1.505 trillion in 2016.
Access Bank
Similarly, Access Bank Plc announced gross earnings of N246.6 billion for the 2017 half year ended June 30, 2017.
This represented a growth of 42 per cent when compared with N174.1 billion achieved in the comparative period of 2016 as stated in the bank’s audited half year result.
The result indicated that the growth in gross earnings was driven by 66 per cent increase in interest income on the back of continued growth in its core business.
The bank also achieved 34 per cent non-interest income underlined by strong foreign exchange income on the bank’s trading portfolio contributed to the growth in gross earnings.
Its profit before tax rose 17 per cent to N39. 5 billion from N33.6 billion recorded during the same period in 2016.
The bank also declared an interim dividend of 25k per share to its shareholders during the period.
According to the reports, the bank’s operating income increased by 29 per cent to N167.5 billion from N130.2 billion in the corresponding period of 2016 while Capital Adequacy Ratio (CAR) remained solid at 21.6 per cent well above the regulatory minimum.
Commenting on the result, Mr Herbert Wigwe, the bank’s Group Managing Director, said that the first half of 2017 year’s performance reflected the strength and sustainability of its business and the effective execution of its strategy.
Wigwe said that the group maintained stable asset quality, recording Non-Performing Loan and Cost of Risk Ratios (CRR) of 2.5 per cent and 1.0 per cent respectively.
“We maintained stable asset quality, recording non-performing loans and cost of risk ratios of 2.5 per cent and 1.0 per cent, respectively and wound down on our foreign currency exposures as a deliberate strategy to de-risk the business.
“As we cautiously grow our loan portfolio in light of macro realities, we will continue to uphold our proactive risk management principles in order to maintain asset quality within acceptable limits.
“While balancing our appetite for growth and profitability, we remain committed to maintaining solid liquidity and capital ratios,” Wigwe said.
He said that the bank’s retail expansion drive led to investments in its channels, distribution network, service quality and brand enhancement.
Wigwe blamed AMCON charges for the higher operating expenses in the period.
“We continue to, however, intensify the implementation of our cost reduction initiatives in order to improve the bottom-line despite high inflationary environment.
“In view of the recovering macro economy, our focus remains growing the retail franchise through digital expansion to allow diversified earnings as well as continuous and proactive risk management as we selectively grow risk assets.
“We will remain resilient in the execution of our bold strategy for increased growth and profitability whilst maximising shareholders’ value in 2017 and beyond,” Wigwe said.