September 18, 2025/Cordros Report
United Bank for Africa (UBA) released its H1-25 financials, reporting a 6.1% y/y growth in PAT to NGN335.53 billion (H1-24: NGN316.36 billion). We attribute the preceding to the sustained core performance, which offset the lower non-core income recorded. Meanwhile, EPS marginally declined to NGN8.86 in H1-25 (H1-24: 8.90), reflecting the dilutive impact of new share issuances. The Board proposed an interim dividend of NGN0.25/share (H1-24: NGN2.00/share), translating to a dividend yield of 0.5% based on the last closing price of NGN47.00/share.
The high-yield environment and earning assets expansion continued to drive topline growth, as interest income advanced by 32.9% y/y to NGN1.33 trillion. Gains were broad-based, with higher earnings from investment securities (+36.1% y/y to NGN694.25 billion), loans to customers (+22.3% y/y to NGN420.46 billion), loans to banks (+3.9% y/y to NGN105.68 billion), and cash & bank balances (+136.3% y/y to NGN113.25 billion).
On the funding side, interest expense surged 70.4% y/y to NGN560.61 billion, reflecting increased cost of customer deposits (+47.6% y/y to NGN301.91 billion) and institutional funding (+226.5% y/y to NGN176.59 billion). Net interest income nonetheless expanded 14.6% y/y to NGN773.03 billion, supported by a 46.9% decline in credit impairment charges to NGN31.97 billion.
Non-interest income contracted sharply by 37.0% y/y to NGN162.34 billion, as the prior year’s sizable FX revaluation gains normalized (-87.5% y/y to NGN40.89 billion). While investment securities gains (+230.6% y/y to NGN70.76 billion) and fee & commission income (+1.3% y/y to NGN147.04 billion) provided some buffer, these were insufficient to offset FX-related pressures.
Operating expenses rose 9.5% y/y to NGN514.99 billion, reflecting higher personnel costs (+28.6% y/y), AMCON levy (+32.1% y/y), and depreciation (+22.7% y/y). However, this was partially tempered by lower other operating expenses (-11.0% y/y), driven by a 27.1% y/y decline in fuel, repairs, and maintenance costs. As a result, the cost-to-income ratio (ex-LLE) edged higher to 57.0% (H1-24: 54.0%).
As a result, PBT declined by 3.3% y/y to NGN388.41 billion, although a lower effective tax charge (-37.9% y/y) supported PAT, which grew 6.1% y/y to NGN335.53 billion.
Comment: We note the resilience in UBA’s core banking operations, supported by elevated yields and growth in earning assets. However, profitability growth was dampened by the sharp fall in non-core income and a still-elevated operating cost base. Looking ahead, we expect earnings momentum to remain underpinned by sustained interest income growth, supported by risk asset expansion and disciplined funding cost management, even as non-interest income normalises further. Our estimates are under review.
