April 24, 2025/InvestmentOne Report
Formidable Top-line Growth: In the first quarter of 2025, UBA achieved profit after tax of NGN189.84bn, representing a 33.15% YoY increase, reflecting sustained profitability in line with recent trends. This was essentially driven by a formidable topline growth, which offset pressure from costs. Gross earnings expanded by 34.05% YoY to NGN764.31bn, reflecting the impact of interest and non-interest income in the period. Specifically, interest income rose by 36.12% YoY to NGN599.83 amidst higher income from securities holdings including treasury bills and bonds. Furthermore, despite the 6.62% decrease in the loan book from the end of 2024 to NGN7.01trn in Q1:2025, interest income from loans grew by 17.43% YoY to NGN229.35bn.
Meanwhile, interest expense rose by 77.00% YoY to NGN247.96bn given the higher interest incurred on deposits amounting to NGN221.26bn, essentially pointing to higher cost of fund. However, net interest income came in at NGN351.88bn, representing a modest 17.03% YoY increase.
Non-Interest Income Supports Earnings: Elsewhere, fees and commission income improved by 9.17% YoY to NGN124.07bn driven mainly by credit related fees and commissions, which jumped by 90.40% YoY to 14.28bn. Moreso, net trading and foreign exchange income rose by 211.19% YoY to NGN37.04bn, aided by higher trading gains from fixed income securities, while fair value loss on derivatives shrank from NGN33.77bn in Q1:2024 to NGN5.94bn in the review period. Eventually, non-interest income amounted to NGN164.48bn in Q1:2025, representing a 27.12% YoY increase.
Consequently, the bank delivered an EPS of NGN5.35, which rose by 35.10% YoY, mirroring the impressive earnings in the first quarter of 2025. This was despite the 12.25% YoY rise in OPEX to NGN245.79bn due to the increase in employee benefit expenses (+27.16% YoY to NGN84.32) and other operating expenses (+4.17% YoY to NGN148.55bn). Nevertheless, ROE and ROA came in at 25.80% and 2.84% respectively in Q1:2025 (vs. 38.87% and 3.79% in Q1:2024).
Looking ahead, our outlook remains positive for the bank. This is hinged on the expectation for earnings to maintain an upward trajectory driven by improved interest income amidst higher securities holdings across treasury bills and bonds. Furthermore, we still expect the bank to gradually expand its loan book as the year unfolds. This should contribute to higher yield on earning assets. Overall, we expect bottom-line to print higher in 2025 despite likely pressure from costs.
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