UBA: Boosting Economic Recovery Through Loans
UBA has a handful of loan offerings that continue to impact individuals greatly by fueling their dreams, ambitions and most importantly, transform their lives
It is not contestable that emerging markets like Nigeria have a lot to achieve by helping individuals and businesses, take root and thrive. This is because the country can only develop better and survive economically under a thriving SME culture as well as an economy where the purchasing power of its citizens are enhanced through well-structured bank lending as report have it that SMEs account for over 80 per cent of enterprises in the world and are responsible for 50 to 60 per cent of employment.
Borrowing money is often a fact of adult life which gives flight to the dreams of an individual by helping them actualise that vision or project. Almost everyone needs to take out a loan at some point. Maybe it’s for a new home. Maybe it’s for college tuition, a car, asset Finance, FX Cash backed loan, Health Loan, or maybe it’s to start a business.
Whatever the reason you have to borrow money, professional financing options are many and varied nowadays. They range from traditional financial institutions, like banks, credit unions, and financing companies, to Internet Age creations, like peer-to-peer lending (P2P).
However, despite the generally acknowledged role of banks’ lending to Individuals and SME’s which in returns helps fostering economic growth and development, they have continued to face a variety of constraints in Nigeria chiefly among them is lack of access to appropriate funds from both the banks.
This is due to the perception of high risks resulting in poorly prepared project proposals, inadequate collateral, absence of verifiable history of past credits and lack of adequate historical records of the company’s transaction.
For the purpose of emphasis, non-banking financial corporations, traditional banks, government institutions and crowdfunding are multiple options where business operators can apply for loans.
One of the traditional banks with well-tailored, multiple loan options for individuals and businesses worthy of mention is United Bank for Africa. The bank has proven to be innovative enough to help individuals and businesses in Nigeria and across Africa weather the storm with several loan facilities that helped change the narrative and eventually catalyse growth.
The best performers in terms of lending to individuals and businesses in first quarter of the year include United Bank for Africa (UBA) Plc, Access Bank Plc, FBN Holdings Plc, FCMB Holdings Plc, Fidelity Bank Plc, Stanbic IBTC Holdings Plc, and Wema Bank Plc. It is worthy of note that UBA did well to pull its weight firmly behind customers and business in 20 African countries which helped in a great way to keep them afloat at a turbulent time occasioned by COVID 19 and most recently inflation from the Ukraine / Russia war.
Commenting on the credit to customers by banks, a financial expert and securities dealer, Mr. David Adonri of Highcap Securities Limited, said short-term credit was required by businesses to finance their working capital.
“Banks are the source of this type of finance. As a result of risk management considerations, bankability of requests is a major factor in credit creation. Of course, banks will usually observe the canons of lending when granting credits. If the economic environment is conducive and prospect is bright, the confidence to grant credit to borrowers will be high because repayment is guaranteed,” he said.
According to him, the volume of credit granted in Q1, 2021 by banks rose because of increase in economic activities.
“Fund users demanded more credit during the period to ramp up their products and services to cover increased consumer pull. The demand on banks for credit also resulted in increased borrowing by banks from Central Bank of Nigeria (CBN) during the period.
“The supply gap in the economy is still huge and this will increase demand for bank credit. As a result, banks like UBA is poised to create more credit this year to meet the rising Gross Domestic Product (GDP) growth rate revised from 1.5 per cent to 2.7 per cent,” he added.
Speaking on the bank’s recent loan position and consequent determination to buoy the nation’s SME sector, Group Managing Director, Oliver Alawuba said, “Our passion for individuals, Small Businesses and great ideas has never been in doubt and is evident in the firm support given the business community as our loan products are tailored specifically to meeting the varying needs of all our customers.
“Despite the tumultuous impact of COVID-19 pandemic globally and across our 23 countries of operation, we created N519.0 billion additional loans as we continued to support our customers and their businesses. Customer deposits grew 48.1 per cent to N5.7 trillion, driven primarily by additional N1.8 trillion in retail deposits. As a global bank, we remain well capitalised and determined to successfully drive financial inclusion on the continent through our innovative products and vast network. Our capital adequacy and liquidity ratios came in at 22.4 per cent and 44.3 per cent, well above the respective regulatory minimum of 15.0 per cent and 30.0 per cent.
Speaking on the bank’s strategy, he said, “Our primary strategy will continue to focus on providing excellent services from our customers’ standpoint, putting the customer first always. Looking ahead, I am inspired by the achievements we have made since the launch of our transformation programme. We have expanded market share considerably across the geographies where we operate and are consolidating our digital banking leadership in Africa. We will continue to leverage our diversified business model and dedicated workforce to further strengthen our position as ‘Africa’s Global Bank.”
Also on the performance, the group chief financial official, Ugo Nwaghodoh said, “The persistent low interest rate environment in 2020 exerted significant downward pressure on margins. Notwithstanding, our interest income for the year grew by 5.7 per cent (to N427.9 billion), driven by 8.2 per cent and 7.5 per cent year-on-year growth on interest income on loans and investment securities respectively. Our interest expense declined by 8 per cent (to N168.4billion) driven largely by a 34.2 per cent decline in interest expense on customer deposits in our Nigerian operations, bringing down the Group’s cost of funds to 2.9 per cent, from 4 per cent in 2019.”
While giving an insight to the bank’s array of loan products, supporting individuals, helping them actualise their dream projects and most importantly changing the dynamics in the industry, group head, Consumer Lending, Anant Rao, recently spoke about some of the products and intrinsic benefits to customers as he said UBA has a handful of loan offerings that continue to impact individuals greatly by fueling their dreams, ambitions and most importantly transform their lives.
“No bank comes close in terms of our offerings that I can categorically say. UBA continues to take the lead I supporting the lives of individuals who have had their lives effectively transformed for good.
“Take for example, the uniqueness of the Senior Citizens Loan which is designed to support pensioners within the ages of 55- 70 years. You can get up to N10 million to start a retirement project, travel the world and do much more and repay conveniently within 36 months,” he said.