UBA Boosts Investors’ Confidence After Record Profit

UBA Boosts Investors’ Confidence After Record Profit 

‘A breakdown of revenue shows interest income was up 15.59 percent to N257.36 billion in the period under review from N222.63 billion the previous year.’ 

Pan African Lender United Bank for Africa (UBA) Plc has boosted investors’ confidence after a record prof growth as it remains impervious to geopolitical tensions, rising inflation, currency devaluation, and regulatory headwinds. 

Of course, the lenders’ half-year results beat analysts’ expectations and its solid capital position means it has the buffers to absorb macroeconomic shocks. 

The tier-one banks latest financial statement as analyzed by MoneyCentral shows there are improvements in key financial ratios, and a surge in electronic banking revenue indicates the bank is serving the needs of its customers across the country who are enjoying expeditious transaction processing. 

Interest and non-interest income

For the first six months through June 2022, UBA’s gross earnings increased by 17.80 percent to N372.75 billion from N316.03 billion the previous year; the growth at the top line (revenue) was largely driven by strong growth in interest and non-interest income. 

A breakdown of revenue shows interest income was up 15.59 percent to from N222.63 billion the previous year. N257.36 billion in the period under review.

Net interest income followed the same growth trajectory as it spiked by 19.90 percent to N177.46 billion in June 2o22 from 148.06 billion the previous year. 

Net interest income (NII) is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors. 

Also, net interest margin (NIM) increased to 5.70 percent in the period under review from 5.20 percent the previous year. The 50basis points improvement in NIM is on the back of continuous asset pricing whilst holding down funding cost. 

The stellar performance was in line with management’s expectation, adding that the Bank’s continued focus on its Customer 1st philosophy to pursue the mission of providing superior value to our stakeholders had increased low-cost customer deposits, and boosted the growth of its payment and transaction banking, according to Oliver Alawuba, group managing director and CEO of UBA. 

The lender saw net income increase by 16.10 percent to N70.33 billion in June 2022 from N60.58 billion the previous year, thanks to an uptick in fees and commission income and non-interest revenue. 

It is important to note that operating profit followed the growth trajectory as it was up 20.10 percent to N255.98 billion in June 2022 from N213.15 billion as at June 2021. 

UBA is committed to delivering value to shareholders as the return on average equity (ROAE) rose to 17.70 percent in the period under review from 16.40 percent the previous year. 

It must be noted that rising interest rates is also responsible for an improvement in earnings as the central bank adopts a hawkish tone to tame stubbornly high inflation. 

The Monetary Policy Committee of the Central Bank of Nigeria has increase the benchmark interest rate (monetary policy rate) from 13% to 14%. 

Nigeria’s headline inflation climbed to a new high of 20.52 per cent in August on a year–on–year basis, according to data from the National Bureau of Statistics (NBS).