Foreing subsidiaries contributed 40 percent to the growth recorded across key performance indicators by Nigerian lender, United Bank for Africa Plc (UBA), its audited 2018 half year results have shown.
Despite a declining yield environment in two core markets, Nigeria and Ghana, the pan Africa financial institution delivered double digit growth in gross earnings, as it recorded a 16 percent year-on-year rise in its top-line to N258 billion against N223 billion recorded in the corresponding period of 2017.
This performance, according to analysts, underscores the capacity of the group to deliver strong performance through economic cycles, even in a challenging business environment.
According to the report filed with the Nigerian Stock Exchange on Wednesday, UBA, reported operating income came in at N168.5 billion, compared to N161.8 billion in the first half of 2017, an increase of 4.1 percent.
Notwithstanding the inflation-induced cost pressure in the period, UBA finished the first half of the year strongly, with a profit before tax of N58.1 billion.
The profit after tax also improved to N43.8 billion, a 3.4 percent growth compared to N42.3 billion achieved in the corresponding period of 2017.
The first half of the year profit, translated to pre-tax and post-tax return on average equity of 23 percent and 17 percent respectively.
UBA’s foreign operations grew in importance with its 40 percent contribution of the group’s profit which, according to analysts, attests to the benefit of UBA’s pan-African strategy and reinforces the Bank’s objective of achieving 50 percent earnings contribution from offshore subsidiaries.
In line with its culture of paying both interim and final cash dividend, the board of directors of UBA Plc declared an interim dividend of 20 kobo per share for every ordinary share of 50 kobo each held on the qualification date – Wednesday, September 05, 2018.
Commenting on the results, Kennedy Uzoka, group managing director/CEO, United Bank for Africa Plc (UBA), said: “Our performance in the first half the year reflects the resilience of our business model and strategies. Despite declining yields in two core markets, Nigeria and Ghana [where] we delivered double digit growth in gross earnings. Our performance demonstrates the success of our digital banking initiatives and broader customer-first strategies.”
He also said that the bank’s enhanced asset-liability management strategieshelped to improve asset yield and grew interest income by 21 percent despite the prevailing yield environment, adding that it’s re-engineered sales structure provided the impetus for renewed retail deposit growth.
“I am particularly pleased by the 24 percent year-to-date growth in retail savings and current account deposits, underpining the increasing penetration of our digital offerings and the group’s overarching goal of democratizing banking across Africa. We improved net interest margin to 7.4 percent in line with our 2018 target, notwithstanding strong competition for wholesale deposits and the impact of rising global interest rates on our foreign currency funding,” he concluded,” Uzoka said.
Also speaking on the financial performance Ugo Nwaghodoh, group CFO, said; “We are optimistic on the future of our business. Amidst economic recovery and uncertainties in Nigeria, our largest market, we sustained our asset quality, with cost of risk at 0.8 percent, whilst the loan book declined by 6.5 percent due to prepayments from some customers in Nigeria and Ghana, we grew the overall balance sheet by 5 percent in the first half of the year. The group’s capital adequacy ratio of 23 percent, bank’s liquidity ratio of 48 percent and loan-to-deposit ratio of 57 percent all reinforce our capacity to grow, with ample headroom for risk asset creation,” Nwaghodoh said.