TheCable

Tier-1 lender, United Bank for Africa (UBA) Plc, has announced its audited financial results for the half year ended June 30, 2020.

Gross earnings increased slightly by 2 percent to N300.6 billion from N294 billion recorded in the same period of 2019.

Net profit for the period dropped 21.6 percent to N44.4 billion from N56.73 billion compared to 2019.

The board also approved an interim dividend of N0.17 per share for every ordinary share of N0.50 each held by its shareholders

Further analysis by TheCable shows that the group recorded N2.2 trillion in net loans to customers, representing a 6.1 percent growth on the back of 65 percent loan-deposit ratio requirement (LDR)  introduced by the apex bank.

Deposits from customers increased impressively by 25.2 percent to N4.8 trillion despite the challenging business and economic environment occasioned by the Covid-19 pandemic.

The bank’s net interest income grew by 8.4 percent to N119.3 billion, net fee and commission income stood at N38.6 billion representing a 7.0 percent increase compared to the similar period in 2019 as customers take advantage of e-channels for business transfers following movement restriction during the period under review.

As at June 30, 2020, the bank’s total assets surpassed the N6 trillion mark as it leaped to N6.8 trillion. Operating income also grew by 7.7% to N197.1 billion compared to N182.9 billion while profit before tax stood at N57.1 billion from N70.3bn in 2019, yielding a 14.4 percent annualised return on average equity.

The bank’s shareholders’ funds remained robust at N634.7 billion from N597.9 billion in December 2019, driven by growth in retained earnings.

Commenting on the results, Kennedy Uzoka, UBA’s group managing director/chief executive officer, said the new result is a demonstration of the bank’s resilience in its business model in an extremely uncertain and tough operating environment

“We recorded commendable growth in our underlying business in terms of customer acquisition, transaction volumes and balance sheet whilst inflation, depressed yield environment and exchange rate volatilities impacted our net earnings as anticipated,” he said.

“Despite the short-term challenges to various economic sectors occasioned by the Covid-19 pandemic, we focused on the fundamentals of businesses in growth-driving sectors of various economies in which we operate and achieved 6.4 percent growth in gross loan to customers, reaching the N2.3 trillion mark. The Group achieved N114.3 billion in interest income from loans and advances to customers, as well as credit related fees and commissions.”

In his reaction UBA’s Group chief financial officer, Ugo Nwaghodoh, said the bank’s  H1 2020 results reflects the inherent benefits of diversification which can be seen in marked growth in contribution from the subsidiaries across Africa.

“Our rest-of-Africa operations have continued to break new grounds in market share gains, providing a buffer for group earnings. As the global and local economies begin to improve, we remain optimistic of a better performance in the second half of the year, with expected improvement in the group’s NIM and ROAE which stood at 5.4 percent and 14.4 percent respectively as at end of H1 2020,” Nwaghodoh said.

“We defensively positioned our loan portfolio whilst we grew gross loans by 6.4 percent, maintaining our prudent risk appetite, even as NPL ratio for the group moderated to 4.1 percent (from 5.3% in 2019FY). We have prudently set-up reserves for loan impairments in recognition of potential losses on the portfolio, resulting in 150 percent growth in our provisioning.

“Albeit, cost of risk moderated to 0.7 percent from 0.9 percent in 2019 FY. The Group’s capital adequacy ratio increased to 24.9 percent providing a very strong buffer for asset growth. We remain committed to maintaining our robust risk management practices, as profitable growth and good asset quality remain our priority in 2020.”