2016: How UBA gained from investments across Africa
Penultimate week, United Bank for Africa (UBA) Plc, the pan-African financial services group operating in 19 countries, released its audited 2016 full year results, showing a significant growth in gross earnings and profits.
UBA achieved unprecedented level in most of the key financial metrics both in revenues and the bottom-line. For the first time, gross revenue hit N384 billion (22 per cent growth from N315 billion at the end of the 2015 financial year) as a group with a profit before tax (PBT) of N90 billion, illustrating the bank’s ability to grow profitability despite the difficult macroeconomic environment.
Leveraging on its strong franchise and geographical footprint across Africa, the UBA group saw a 32 per cent growth in profit before tax to N91 billion, compared to N68 billion profit recorded over the same period of 2015, while the bank’s profit after tax grew by 22 per cent to N72 billion, from N60 billion recorded the previous year.
The performance was buoyed by considerable growth in both interest and non-interest income, as well as increasing efficiency gains from cost management initiatives.
UBA’s impressive subsidiary contribution to the group, is estimated at one-third of profit in 2016, from a quarter in 2015 financial year.
Ugo Nwaghodoh, Chief Financial Officer (CFO) of UBA Group, in an interview with Daily Trust, reflected the mood of the management of the bank when he said: “In the situation we saw ourselves last year, where the key market which is Nigeria, slipped into a recession, we think this is a result to be celebrated.”
Discussing the facts behind the numbers, Nwaghodoh highlights that one of the fundamental contributions to this is the result from its African operations. “These are some of the benefits of diversification. If you have any micro economic situation in any of the operating entities, or country, you can then have other entities making up for the gaps.”
Understand Operations UBA’s African
One of the areas the group is driving business across Africa is in supporting key areas of the economy. “So there are markets where we are supporting significant businesses in oil and gas, infrastructure, agriculture and some top manufacturers and these are the key drivers in these economies,” the CFO said.
Credit Risk Management
“UBA has been very conservative in its credit risk management approach,” he said. “We have a moderate risk appetite, which is to say we are not very aggressive with taking risk because it is one thing that can take out a bank very easily. The import of that reflects in the quality of our credit portfolio.
Non-performing loans and insider loans
For the previous year, it was 1.8 per cent, in 2016, it went up to 3.9 per cent which is within the regulatory threshold. The group says it is working to reduce it further down. Analysts are of the view that with the economy turning round for the better, it should help in that regards.
The CFO said: “As required by regulation, we have clearly disclosed our insider facilities in our financial statement. Our insider loan is a very small component of our overall portfolio, and more important is that they are all performing.”
Dividend Proposal
Following the impressive performance, the board of directors proposed a final dividend of 55kobo per share, subject to the approval of the shareholders at the Annual General Meeting (AGM), scheduled to be held on April 7, 2017 at the Eko Hotel and Suites in Lagos.