Market analysts almost missed that track when they believed that because the economy has remained weak, banks would post poor results.
But should they be blamed when the operational environment appears hostile to the survival of businesses? Critically looking at the macro-economic environment, many would lose hope and not try to venture at all.
After all, the Nigerian economy has not been strong lately and no immediate indication shows otherwise. The economy only recorded a paltry growth of 5.1 per cent in half year 2021from a negative position of -6.10 in second quarter 2020.
Recent statistics also reveal that the rate of unemployment, the second highest in the world is 33%; Underemployment rate stood at 22%; inflation which stood at 18.6 per cent has just eased to 17.01 per cent; diaspora remittances inflow in the country fell by 24 per cent from $5.6billion in 2020 to $4.2billion in half year 2021.
Remittances had plunged 27 per cent year on year (YoY) to $17.2billion in 2020 from $23.55billion in 2019.
Many have not forgotten that the operating environment last year was choking for almost all the business sectors including banks. In addition to the devastating effect of Covid-19 on the economy which 2021 budget runs a deficit of N5.2trillion representing 3.6 per cent, while the country owes N35trillion debt.
The fear here hinges on the fact that federal government spends about 90 per cent of its revenue to service debt.
The major revenue earner for the country, crude oil, which price hovers between from $72pbdand $75.46 bpd as at September 16, 2021 still fluctuates.
Insecurity has not only hobbled agriculture, many parts of the Northern part of Nigeria have been taken over by bandits that not much business activities can subsist.
With the fearful scenario above, economic trajectory of the country is still uncertain.
This is because even the apex bank has warned that care must be taken to galvanize and push the economy out of slumber. The Apex regulator reportedly even warned its staff against unnecessary outings in Abuja, the capital of Nigeria for fear of kidnappers and bandits.
But some financial institutions have defied these impeding challenges to post even better performance in the half year 2021. While other banks like Stanbic IBTC is posting decline of 52pre cent in profit, UBA, one of the leading African bank is raking in a whopping 76.2billion in profit before tax, representing 33 per cent increase from N57.1 billion in 2020.
Gleaned from theH1 results 2021, the bank’s annualized Return on Average Equity stood at 17.5 per cent as against 14.4 per cent a year earlier.The results filed with the Nigerian Exchange, also showed that the Group’s gross earnings grew 5.0 percent to N316billion from N300.6billion, while total assets rose to N8.3 trillion from N7.7trillion.
While customer Deposits also crossed the N6trillion mark growing by 7.4 per cent to N6.1trillion in the period under consideration, compared to N5.7 trillion as at December 2020,Shareholders’ Funds of the Group remained strong at N752.5billionn up from N724.1billion in December 2020, reflecting its strong capacity for internal capital generation.
In line with the bank’s culture of paying both interim and final cash dividend, the Board of Directors of UBA Plc has declared an interim dividend of 20kobo per share for every ordinary share of 50kobo each, held by its shareholders.
UBA’s Group Managing Director/Chief Executive Officer, Mr. Kennedy Uzoka, expressed delight over the bank’s performance, adding, “This has been a strong first half for us, as global economic recovery exceeded expectations, creating a positive rub-off on consumer and corporate confidence, savings and investment activities. We saw this positively impact our business, as we continued to leverage our key strategic levers – People, Process and Technology, and our Customer 1st Philosophy, to revolutionise customer experience at UBA.
Whereas its stock price closed at N7.60 per share as at September 16, 2021, investment climate in Nigeria is fast becoming one of the most risky and volatile around the world, only comparable to that of Afghanistan, Pakistan, Iraq, among others. As a result investors are adopting cautionary investment attitude in the country because they are no longer sure of their safety and that of their investments.
Of course, for the same reasons, while some have withdrawn their investment from Nigeria, others are edgy about bringing funds to invest in the country which security profile is threatening. These discomfort have been blamed on the high country risk which the nation is experiencing currently.
But these threats have not deterred UBAwhich has remained resilience.
UBA has shown signs that its owners should expect bountiful harvest at the end of the year 2021. This is indicative of previous strong performances.
In the first quarter 2021,the bank leveraged on modest growth in both interest and non-interest income as well as increased efficiency to deliver a 24 per cent in profit before tax (PBT), which printed at N40.6 billion, compared with N32.7 billion in 2020. Profit After Tax also grew faster by 26.8 per cent from N30.1 billion to N38.2 billion.
The Group Managing Director/CEO of the UBA Plc, Mr. Kennedy Uzoka, said the results reflected bank’s capacity to sustainably grow earnings even in a highly uncertain macroeconomic environment.By the end 2020, the groups Gross earnings grew 10.8% year-on- year (YoY) to N620. 4 billion, total assets grew 37.0% to N7. 7 trillion, whilst profit before tax grew 18.5% to N131.
In the last five years, from 2016 to 2020, UBA’s management team under the leadership of Kennedy Uzokahas displayed strength and robust performance. This has been consistent as its profit after tax grew by 45.4 per cent from N90.642 billion in 2016 to N131.860billion in 2020. Its total assets has grown by 119.6 per cent in five years while loans and advances to customers have expanded by 61 per cent in the review period.
Overall, this is not a mean performance by any standards, especially at a time when the head and tail winds are strongest and devastating for businesses not only in Nigeria but also all over the world.
Analysts are bullish on the bank which has shown vigour and promise. One other significant thing about UBA is that it has long left its contemporaries behind and stands out as a leader.The lender (Company) has remained formidable in the midst of all odds.
In fact, in the previous years’ its strong performances have also provided a sturdy base for the vigour and strength which the lender has displayed.
And here is how Adonri situates it: ‘UBA has promised to pay dividends in 2020. I will take it from the historical perspective. UBA was one of the three old dominant banks and among them, I mean Union Bank and First Bank have been seriously troubled to the point that they have fallen down the pecking order. Union Bank and First Bank are now rubbing shoulders with the tier 2 and 3 banks.
‘’But UBA has remained entrenched as a tier 1 bank. That shows that the bank is resonant and has continued to grow from strength to strength. For several years it has been bedeviled by the kind of challenges that have burdened the other banks.
‘’Though it has its own internal problems. But it has been able to weather the storm. It has been able to do that because of the kind of re-invigorated leadership that one person has brought to the table and that is Tony Elumelu. Tony has kept that pedigree and has been able consolidate the bank, making a very vibrant and competitive brand.
‘’Then their cross border expansion has added huge value to the bank. The bank is now entrenched in the international arena, I think for that bank the sky is its limit, especially now that there is AFCTA. The African continental trade pact which will bring most African countries to trade among themselves is a definite boon. Most of those transactions will run through banks and UBA is one of the banks that is positioned to benefit from that trade’’, Adonri concluded.