Uzoka (L), Elumelu (R)


By Okey Onyenweaku

The management of UBA has promised to not only harness its talents and resources to deliver better and sterling results in the years to come, but to also deploy even greater innovations to drive its operations. Speaking at the tele conference organized by the bank last week, UBA’s GMD, Mr. Kennedy Uzoka who said the bank was built to last, revealed the far reaching measures taken by the institution to build the right kind of capacity for a better year ahead.
He explained that with the bank’s ‘Customer first’ philosophy, the bank was indeed growing in the right direction.
According to him, the bank is a realistic and conservative institution which is helping it to build capacity.


The pan-African financial institution recorded impressive growth across the key income lines, its audited results for the full-year ended December 31, 2020 has shown.
According to the 2020 audited financials filed at the Nigerian Stock Exchange (NSE) on Monday, the bank’s gross earnings grew by 10.8 percent to N620.4 billion, compared to N559.8 billion recorded in the corresponding period of 2019. The bank’s total assets also grew by 37.0 percent to N7.7 trillion for the year under review.
The lender defied the challenging business environment occasioned by the Covid-19 pandemic and the resultant effect on economies globally, to post impressive Profit Before Tax (PBT) of N131.9 billion, compared to N111.3 billion at the end of the 2019 financial year.

In the same vein, the Profit After Tax (PAT) rose remarkably by 27.7 percent to N113.8 billion compared to N89.1 billion recorded at the end of the 2019 financial year.
On the cost side, Operating Expenses grew by 10.1 percent to N249.8 billion, as against N217.2 billion in 2019, which is well below average inflation rate of 13.2 per cent for the year, and also reflecting the bank’s cost effectiveness.

In its usual tradition of rewarding shareholders, the bank proposed a final dividend of N0.35 for every ordinary share of 50 kobo. The final dividend, which is subject to the affirmation of the shareholders at its Annual General Meeting, will bring the total dividend for the year to N0.52 as the bank had paid an interim dividend of N0.17 earlier in the year.
UBA recorded a remarkable 24 percent growth (to N2.6 trillion) in loans to customers, whilst customer deposits increased by 48.1 percent to N5.7 trillion, compared to N3.8 trillion recorded in the corresponding period of 2019, reflecting increased customer confidence, enhanced customer experience, successes from the ongoing business transformation programme and the further deepening of its retail banking franchise.

Commenting on the result, the Group Managing Director/CEO, Kennedy Uzoka noted that the year 2020 was important for UBA Group, as it gained further market share in most of its countries of operation.
He said, “We ended a very challenging year on a reassuring note. The Bank recorded double-digit growth in both our top and bottom lines, as gross earnings and after-tax profit grew by 10.8% and 27.7% to N620.4billion and N113.8 billion respectively. Return on equity was 17.2%, even as our cost-to-income ratio moderated to 61.3%. Our earnings per share of N3.20 is a 26.8% growth from the preceding year, as we continue to ensure maximum value creation for our highly esteemed shareholders.

Continuing, Uzoka said, “Despite the tumultuous impact of Covid-19 pandemic globally and across our 23 countries of operation, we created N519.0 billion additional loans as we continued to support our customers and their businesses. Customer deposits grew 48.1% to N5.7 trillion, driven primarily by additional N1.8 trillion in retail deposits. As a global bank, we remain well capitalized and determined to successfully drive financial inclusion on the continent through our innovative products and vast network. Our capital adequacy and liquidity ratios came in at 22.4% and 44.3%, well above the respective regulatory minimum of 15.0% and 30.0%.

Speaking on the bank’s strategy, he said, “Our primary strategy will continue to focus on providing excellent services from our customers’ standpoint, putting the customer first always. Looking ahead, I am inspired by the achievements we have made since the launch of our transformation programme. We have expanded market share considerably across the geographies where we operate and are consolidating our digital banking leadership in Africa. We will continue to leverage our diversified business model and dedicated workforce to further strengthen our position as ‘Africa’s Global Bank’.”

Also speaking on the performance, the Group Chief Financial Official, Ugo Nwaghodoh said, “The persistent low interest rate environment in 2020 exerted significant downward pressure on margins. Notwithstanding, our interest income for the year grew by 5.7% (to N427.9 billion), driven by 8.2% and 7.5% year-on-year growth on interest income on loans and investment securities respectively. Our interest expense declined by 8% (to N168.4billion) driven largely by a 34.2% decline in interest expense on customer deposits in our Nigerian operations, bringing down the Group’s cost of funds to 2.9%, from 4% in 2019.

Nwaghodoh said, “We have prudently stepped-up our reserves for loan impairments, hence the 37.4% YoY growth to N22.4billion, implying a 0.9% cost of risk. These reserves provide adequate cover for impairments and should help minimise the need for further reserves in the current year, in view of the improving global operating environment. Our NPL ratio has declined to 4.7% (from 5.3% in 2019), driven by growth in the loan book, robust credit risk monitoring architecture, and payment of Past Due Obligations (PDOs).

The CFO added that as Nigeria continues to see signs of recovery from the Covid-19 pandemic led by resumption of economic activities across the globe, increase in consumer spending, and continued progress on vaccine deployment, UBA is well- positioned for greater synergy across the Group. “We remain committed to our prudent risk management practices, and optimistic of best value for our stakeholders in the days ahead,” he added.
United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than twenty-one million customers, across over 1,000 business offices and customer touch points, in 20 African countries. With presence in the United States of America, the United Kingdom and France, 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.


Also in the third quarter 2020, the bank similarly proved to be formidable.
It succeeded in upping gross revenue by 5.94% to ₦453.67 billion, on the back of interest income that rose 6.46% to ₦317.14 billion, but was weakened by fees and commissions income and other operating revenue which waned 1.76% and 28.14% respectively during this period.
Net trading and foreign exchange income which jumped 28% to ₦45.72 billion in Q3 2020 was not enough, as the 72.23% in UBA’s impairment provision for bad risk assets it weighed down on its performance.
Though interest expenses dropped by 5.66% to ₦131.12 billion, fees and commissions costs and personnel costs soared 23.8% and 20.67% respectively during the period under review.

The Group grew loans and advances by 12.94% to ₦2.45 trillion in Q3 2020, lifting its total assets by 29.98% to ₦7.06 trillion 9 months from ₦5.6 trillion as at December 2019.

It also made significant progress in mopping up cheap funds as deposits swelled 36.64% to ₦5.6 trillion compared with ₦4.1 trillion in December last year.
However, UBA felt the impact of the tough operating environment as its post-tax profit growth was stunted, declining 5.51% to ₦77.13 billion in Q3 2020.

‘’In spite of the current turbulence in the operating environment, occasioned by the global pandemic (COVID-19), the Group delivered gross earnings of N454.4 billion, which is a 6% growth from the N428.7 billion recorded in 9M 2019. This was driven largely by a 6% growth in our interest income (to N317.1 billion) despite the depressed yield environment across our major markets.

Operating environment

Though, the price of crude has hit $70, the times are still tough. Analysts believe it has become hard for firms to fly in such weak economies as Nigeria: where the economy which has just crawled out already slid in to recession by 0.11per cent; where inflation is hitting the roof top at about 16.4 per cent; where the Naira has lost value and vigour; where the budget deficit stood at -3.64% of GDP; where insecurity has halted business activities in some parts of Northern Nigeria; where unemployment remains very high; where government is unstable; and where economic policies are done to favour a section of the country.

Recently, the government also hiked the prices of fuel and electricity for the masses of the country which has  more 82 per cent of its population in the poverty bracket.
‘’Who would expect companies to perform magic in a country where its citizens appear to have lost hope’’, a senior civil servant who would not want to be mentioned in print.

”A very challenging time to run a financial institution, however, it also offers a chance for those, who drive to showcase their big capacities,” an analysts who would not want his name mentioned in print said.
But the likes of UBA which have been resilient, innovative and target oriented have pushed against the head winds to remain strong. This has been reflected in its performance over the years.
Managing Director of HighCap Securities Ltd, Mr. David Adonri, told Business Hallmark that UBA’s stock price was very attractive.

‘’UBA’s P/E Ratio is not bad at all. What P/E Ratio means is if you buy that stock now at the current price, it could take you about 4 years or 3 years and 3months to recoup your investment on that stock. I think UBA stock is at good one at that P/E Ratio. An average P/E ratio that will make a stock attractive is usually about 5, that means that if you buy now you will recoup your money in five years. But generally the stock market is a long term market so in other countries, and particularly in mature markets they are actually looking at returns over a long time. In mature markets it actually takes about 10 to 20 years to recoup your investment. Ours here is below 10 years. 10 years is good. So UBA’s stock is attractive.’’

“Impressively, the bank recorded growth in both core and non-core income lines despite the pressured operating environment during the fiscal year. On the EPS of NGN3.20 (2019FY: NGN2.52), the board has proposed a final dividend of NGN0.35/s (vs. 2019FY: 0.80/s), which equates to a yield of 4.4% based on the closing price of NGN8.00 as of the 8th of March 2021,” said analysts at Cordros.

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.

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.