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United Bank for Africa (UBA Plc bolstered earnings performance in the first half of the financial year 2022, according to regulatory filling, top and bottom lines were strengthened strongly in the period.
The Pan African lender’s profit before tax grew by 12.6% year on year to N85.75 billion. Following a lower income tax expense, profit after tax printed N70.33 billion from N60.58 billion 12-month print, translating to a growth of 16.1% year on year
According to the Pan-African lender, its earnings per share (EPS) inched higher 17.1% to N1.98 from N1.69 in the comparable period, supported by strong growth in core and non-core income, according to analysts.
An interim dividend of N0.20 per ordinary share was proposed for the period, representing a dividend yield of 2.7% based on the previous closing price of N7.30.
According to the audited financial statement, UBA Plc saw its interest income move upward by 15.6% year on year to N257.36 billion, a trajectory that was underpinned by healthy income from the major line items.
Also supporting the topline was growth in investment securities amidst high interest rate environment engineered by the monetary authority. Specifically, group’s income from investment securities rose by 21.6% year on year, reflective of the higher yield in the fixed income market.
Income from loans and advances to banks and customers advanced by 27.7% year on year and 11.2% year on year, respectively. Reflecting new era of money pricing, interest expense expanded by 7.2% to N79.90 billion as the bank incurred higher costs on its deposit from customers.
On the other hand, there was a moderation in the cost of debt following the reduction in the bank’s interest-bearing borrowings, down 10.7% to N406.81 billion. Consequent to the faster interest growth in income relative to expense, the bank recorded an expansion in net interest income, up 19.9% year on year.
All in, net interest income as adjusted expanded by 17.5% to N169.13 billion, according to analysts. In the first half, UBA recorded a 22.0% increase in non-interest income (NII) to N78.52 billion, supported by the significant gains from trading of investment securities FX revaluation.
Gains from investment securities jumped 624.2% to N14.19 billion while +173.3% spike in FX revaluation gain which settled at N2.08 billion helped strengthened the bottom line. Its net fees and commission income also popped 30.9% to N59.92 billion.
Amidst rising inflation, UBA’s operating expenses increased by 21.9%, as all contributory items increased during the period – NDIC premium jumped 23.7% to N8.79 billion, personnel expenses grew 21.9% to N161.90 billion, depreciation and amortization rose 13.8% to N13.04 billion and AMCON levy increased 12.1% to N31.18 billion.
“UBA’s financial performance is impressive, given the inflationary pressures during the period. We view the bank’s ability to sustain strong growth in core and non-core income as very positive; therefore, we remain optimistic that the bank will maintain a positive growth trajectory throughout the year”, Cordros Capital said in note.
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