Second quarter report of the United Bank for Africa, UBA has showed a remarkable growth across key performance indices in the banking sector.
No one seems to know what the future holds for the Nigerian economy as things stand today. Even leasers of the financial institutions which are the engine of the economy, have been known to privately confess that they are at a loss. So what is obvious is that there are fears and uncertainties in the land about the shrinking economy.
You recall that after the first four -year term of the Buhari-led government in which the economy shuddered and slipped into a recession, the story of its recovery has been neither here nor there.
After the Nigerian economy had plunged into an 18-month recession due to significant drop in crude oil price to $27 in 2016, it grows at a snails pace since June 2017. Subsequently, the banks have been deploying every available strategy to turn the hand of the clock.
Within this climate of turbulent, experts assert that only the strong, focused and proactive can weather the Nigerian economic storms and the associated climate of very slow growth that is sweeping through the entire world economy.
Many banks are burdened with numerous challenges ranging from high NPLs and capital adequacy problem among other upheavals which have culminated generally in their single digit profit margins in recent times.
Analysts believe that in an operating environment in which the likes of former Skye Bank Plc (now Polaris Bank) simply lost their bearings only to be saved by the Central Bank of Nigeria.
And where Diamond Bank Plc, a former leading financial institution caved in to the pressures of the tough operating environment and was acquired by Access Bank Plc, survival is tough.
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In fact, industry analysts are still pointing fingers that a few lenders may not be as strong and healthy as they are perceived on the outside aside from those which the choking operating environment has pushed to the cliff and are still struggling to survive.
It is in such a terrain that the United Bank for Africa (UBA) is applying far reaching measures to capture substantial market share and where GTBank, Zenith Bank and Access Bank are beating their chests and projecting strong figures in the future.
Today, under the leadership of Kennedy Uzoka in particular, UBA is exploring and nurturing new frontiers to enable it sustain its leadership position.
As one analyst put it, Uzoka has consolidated his leadership with strong value addition and this is reflected in the second quarter performance
As the numbers outline, despite all odds, United Bank for Africa (UBA) Plc dazzled the market again with an impressive growth across key performance indices as well as a significant contribution from its African subsidiaries, according to its audited half year financial results for the period ended June 2019.
In spite of the increasingly unpredictable environment witnessed in some of its countries of operations, the pan African financial institution delivered double digit growth in its profit before tax.
It rose by 21 per cent to N70.3bn for the half year to June 2019, up from N58.1bn recorded in the similar period of 2018, just as the Profit after Tax also improved to N56.7 billion, a 29.6 percent growth compared to N43.8 billion achieved in the corresponding period of 2018.
The profit for the first half of the year, translated to an annualised return on average equity of 21.7 per cent.
According to its results filed with the Nigerian Stock Exchange, UBA recorded a 14 percent year-on-year rise in top-line, with gross earnings of N293.7 billion, compared to N257.9 billion recorded in the corresponding period of 2018.
Analysts say that this performance emphasises the capacity of the Group to deliver a strong performance through economic cycles in spite of the overall challenging business environment.
As at 30 June 2019, the Banks Total Assets grew by 4.8 per cent crossing the N5 trillion mark to N5.10 trillion.
Customer Deposits also rose by 4.8 per cent to N3.51 trillion, compared to N3.35 trillion as at December 2018.
This growth trajectory underscores UBAs market share gain, as it increasingly wins customers through its revitalized customer service culture coupled with innovative digital banking offerings.
The banks Shareholders Funds remained strong at N542.5 billion, reflecting its strong capacity for internal capital generation.
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 N0.20 per share for every ordinary share of N0.50 each held by its shareholders.
Commenting on the results, the Group Managing Director/CEO, United Bank for Africa Plc (UBA), Mr. Kennedy Uzoka said: I am pleased with the half-year performance of the Group, having delivered 14 per cent growth in gross earnings and 21 per cent growth in profit before tax.
Despite the subdued yield environment in some of our large markets, we achieved a 9% growth in interest income and defended the net interest margin.
We also achieved a 39% growth in our electronic banking revenues, as we broaden and deepened our digital banking play across Africa.
Revenues from our remittance and funds transfer businesses grew 69% and 53% respectively. All these factors attest to the efficacy of our strategies and the resilience of our business model.
I am very optimistic that the ongoing Group-wide transformation program, will in the quarters ahead, enable the Bank to deliver substantial operational efficiencies and best-in-class customer service, which will ultimately boost earnings.
We sustained our asset quality with the NPL ratio down to 5.62%, from 6.45% as at 2018FY. We will continue to adopt best practice standards to grow and manage the portfolio in the quarters ahead.
The bank had in its 2018 audited financial year end results grown its gross earnings by 7.0 per cent to N494.0 billion, compared to N461.6 billion recorded in the corresponding period of 2017.
The banks total assets also grew significantly by 19.7 per cent to an unprecedented N4.9 trillion for the year under review. The banks Profit Before Tax was quite impressive at N106.8 billion, a 2.4 per cent growth, compared to N104.2 billion in 2017 financial year.
In the same vein, the Profit After Tax rose by 1.4 per cent to N78.6 billion, compared to N77.5 billion recorded in 2017.
Due to lower foreign exchange trading income, Operating Expenses grew by 4.1 per cent to N197.3 billion, compared to N189.7 billion in 2017.
The contributions of ex-Nigeria subsidiaries at 40 per cent, again confirms the strong footing of the groups franchise in Africa.
A bank established in 1949, became a lackluster institution until in 2005 when the team of managers from STB acquired it and gave a new lease of life and turned it around for high performance and value added.
Tony Elumelu quickly discovered the opportunities therein in expanding to the African frontiers and established in over 20 countries.
The creative move has since started yielding immense results to the top and bottomlines as its subsidiaries contributed over 38 per cent of its profit before tax.
“We had a strong start in the year given the prevailing macroeconomic environment across our various markets.
There is better diversification in profit contribution as our banking subsidiaries across Africa contributed 38% of the profit before tax, whilst our recently re positioned UK business contributed 4%.
We expect this dispersion to continue, as the subsidiaries consolidate on their share of the various markets.UBAs results, the Group CFO, Ugo Nwaghodoh confirmed
Since 2005 when the new bank came into being UBA has been floating on air; a combination of clever marketing, strong and bold thinking (typified by the way the former STB took over the accounts of members of the national assembly and the legislative institution itself).
And a coherent succession plan that has avoided internal rancour and allowed some of the industrys finest hands rise to positions of greatest competence.
In 2006, the bank pioneered the interconnection of its then 428 African branches making it the largest online real time branch network in Africa.
Africans are able to withdraw or deposit money in any of these branches regardless of where their accounts are domiciled.
Since then, the bank has remained in the forefront of technology innovation in the African banking space, launching the first artificial intelligence Virtual Banking Robot in the African market early 2018.
At the moment then, the witness is clear: UBA is coasting along notwithstanding the storms, with Uzoka proving once again to be a redoubtable pair of safe hands. And heres hoping and praying that this ray of hope and promise would be replicated at the broader national and continental economic stage.
