UBA: Uzoka glitters with 1st term report

.           32% profitability growth, 55kobo dividend payment

By OKEY ONYENWEAKU

With recession bagging at their doors, Nigerian banks have seen corporate performance slide a notch, but countering this narrative, the United Bank for Africa, one of the country’s largest financial houses, has displayed strength and vigour, having pushed past analyst’s expectation to post a sterling 2016 year end performance.

The pan-African financial institution showed an impressive 22 per cent growth in gross earnings and profits an attestation to its resilience, enhanced productivity and geographic diversification, as evident in the impressive contribution from its continental subsidiaries.

The banking Group 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.

As reflected in the results released on Friday at the Nigerian Stock Exchange (NSE), covering the period 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.  In the same vein, UBA’s profit after tax grew by 21 percent to N72 billion, from N60 billion recorded the previous year. Notably, the performance was buoyed by considerable growth in both interest and non-interest income.

Furthermore, UBA’s subsidiaries outside of Nigeria are increasingly gaining market share across the 18 African countries, thus reinforcing the strong and impressive subsidiary contribution to the Group, estimated at one-third of profit in 2016, from less than a quarter in 2015 financial year.

Following the impressive performance, the Board of Directors proposed a final dividend of 55kobo, subject to the approval of the shareholders at the forthcoming Annual General Meeting, scheduled to be held on 07 April, 2017 at the Eko Hotel and Suites in Lagos.

The Bank had earlier paid an interim dividend of 20k to shareholders, bringing the total dividend for the 2016 financial year to N0.75, an unprecedented yield of 13.9%, based on the stock’s unit price of N5.40 on 23 March, 2017 on the floor of the NSE.

Commenting on the results, Kennedy Uzoka, the Group Managing Director and Chief Executive Officer expressed satisfaction at the resilience of the Bank, as reflected in the outstanding performance, despite the macroeconomic challenges in a number of countries where UBA operates.  “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.

Speaking on its outlook for the 2017 financial year, Uzoka expressed optimism, as the bank’s pan-African operations increasingly gain critical mass across its chosen markets. “As we further our Customer First Philosophy, we are approaching 2017 with stronger optimism, especially as the outlook remains positive in most of our markets. We are not unaware of the macro challenges, competition and constantly changing customer preferences. Rather, we believe we are well equipped to win in the market. We reiterate our pledge to delivering excellent service to our customers, as we remain committed to creating superior and sustainable return for our shareholders.”

Ugo Nwaghodoh, Chief Financial Officer (CFO) of UBA Group said the bank extracted efficiency gains across its operations to boost profitability.  He stated that the bank has seen significant improvement in key areas across all business lines, including a decent improvement in the net interest margin. “Our performance in 2016 reflects the strong potential and resilience of the business. We grew top and bottom lines by 22% and 32% respectively, despite the stagflation in Nigeria, our core market,” the CFO noted.

He also expressed delight at the performance of the Group’s African subsidiaries (ex-Nigeria), which according to him, contributed a third of the profits recorded, adding that the bank will continue to leverage innovative offerings to grow its share of the respective markets. “As we diligently execute our Customer First initiative, I am particularly upbeat on the future of our business and the value creation for shareholders. We will further extract latent potentials, as we simultaneously mine new opportunities for growth,” he noted.

United Bank for Africa Plc is a leading financial services group in sub-Saharan Africa, with presence in 19 African countries, as well as the United Kingdom, the United States of America and France. 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 about 11 million customers globally, through one of the most diverse service channels in sub-Sahara Africa; 632 business offices, 1,750 ATMs, some 13,500 PoS, and a robust online and mobile banking platform. UBA was the first Nigerian bank to make an Initial Public Offering (IPO), following its listing on the NSE in1970. It was also the first Nigerian bank to issue Global Depository Receipts (GDRs). The shares of UBA are publicly traded on the Nigerian Stock Exchange (NSE) and the Bank has a well-diversified shareholder base, including foreign and local institutional investors as well as individual shareholders.