March 9, 2021

By Paschal IJEH InvestAdvocate

Lagos (INVESTADVOCATE)-Africa’s global lender, the United Bank for Africa Plc (UBA)  said its profit after tax (PAT) for the period ended December 31, 2020 climbed up 27.7 percent to N113.7 billion from N89.1 billion recorded a year ago.

Profit before tax (PBT) grew 18.5 percent to N131.8 billion from N111.3 billion declared the same period of 2019.

Gross earnings of UBA increased from N560 billion in the 2019 year end to N620 billion posted in the review period of 2020; showing an increase of 10.7 percent, the lender said in a filing with the Nigerian Stock Exchange (NSE).

Interest income increased by 5.7 percent year-on-year to N427.86 billion supported by the growth across major contributory lines, with the largest contributions coming from loans and advances to customers (+8.2 percent  year-on-year to N225.04 billion) and banks (+150.5 percent year-on-year to N9.52 billion), as well as investment securities (+1.7 percent year-on-year to N181.21 billion). There was, however, a decline in income from interest on cash and bank balances (-18.7 percent year-on-year to N12.09 billion), according to Cordros report.

Kennedy Uzoka, Group Managing Director/CEO of the Bank noted that the year 2020 was important for UBA Group, as it gained further market share in most of its countries of operation.

“We ended a very challenging year on a reassuring note. The Bank recorded double-digit growth in both our top and bottom lines, as gross earnings and after-tax profit grew by 10.8% and 27.7% to N620.4billion and N113.8 billon respectively. Return on equity was 17.2%, even as our cost-to-income ratio moderated to 61.3%. Our earnings per share of N3.20 is a 26.8% growth from the preceding year, as we continue to ensure maximum value creation for our highly esteemed shareholders.

Continuing, Uzoka said, “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% to N5.7 trillion, driven primarily by additional N1.8 trillion in retail deposits. As a global bank, we remain well capitalized 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% and 44.3%, well above the respective regulatory minimum of 15.0% and 30.0%.

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’, ” Uzoka said in a statement made available to InvestAdvocate.

The Africa’s global lender proposed a final dividend 0.35kobo per share added to an interim dividend of 0.17 kobo for the half year ended June 30, 2020, representing a total dividend of 52 kobo.

Qualification and closure date has been scheduled for March 19 and March 22, 2021 respectively, while Annual General Meeting (AGM) and payment dates are scheduled for April 1, 2021 each.

Cordros report says the proposed final dividend of N0.35 kobo per share from the earlier paid N0.17 interim dividend when compared to N0.80 kobo per share paid in 2019 financial year end, equates to a yield of 4.4 percent based on the closing price of N8.00 as of March  8, 2021.

“On the face of it, the pandemic’s impact is not apparent on income generation, given strong performances in both funded and non-funded income growth during the year. In our view, the much-reduced dividend may be tied to the need to be prudent, given the still under pressure operating environment. That being said, we expect the stock price to come under pressure in the coming trading sessions,” Cordros added in its analysis.