August 26, 2016/Cordros Research
United Bank of Africa (UBA) released its half earning yesterday evening. Annualized EPS was N1.88 (H1’15: N1.88) ahead of consensus and our estimate of N1.49 and N1.40 respectively, while RoAE was 18.03% versus our estimate of 14.8%. The bank declared a N0.20 dividend (H1’15: N0.20) with a closure date that runs from 12th to 16th of September 2016 and a payment date of 19th of September.
Net interest income declined 2.3% y/y, as a 6.6% y/y drop in interest income outweighed the impact of a 14.4% y/y drop in interest expense. Net loans and customer deposits expanded by 24.5% YTD and 15.9% YTD respectively on account of the naira depreciation. Non-interest income climbed 11% y/y following strong fee and commission income but was also supported by foreign exchange income which had similar impact on the previous year’s result. Asset quality deteriorated significantly with NPLs rising to 2.4% from 1.7% in FY’15 while Impairment charges climbed 94.9% y/y and 480% q/q respectively. Operating expense moderated (-0.9% y/y). Consequently PBT increased by 3.1% y/y.
Note: Yesterday, the CBN disclosed that UBA had been readmitted into the forex market after it had remitted all outstanding NNPC/NLNG deposits in its possession to NNPC’s Treasury Single Account (TSA) at the CBN. The announcement followed reports that nine banks (inclusive of UBA) had not remitted US$ 2.2 billion worth of NNPC deposits with UBA holding US$530 million of the deposits. Yesterday’s CBN announcement would imply that UBA has fully paid the $530 million dollar. In it its HY’16 report, UBA disclosed it had about N569 billion (US$ 2.0 billion) and N101 billion (US$ 360 million) in FCY($) deposits and borrowings respectively. Of the N101 billion (US$360 million) in FCY ($) borrowings only $50 million is due in principal payments next month (September, 2016).
