By Chika Otuchikere
The United Bank for Africa(UBA) Plc, has announced its audited financial results for the half yearended June 30, 2020, declaring a gross earnings of N300.6 billion.
The continent’s leadingfinancial institution also declared a dividend of 0.16k, showedcommendable growth across key performance indices as well as increasedcontribution from its African subsidiaries.
This performance isnotwithstanding the challenging business and economic environment occasioned bythe Covid-19 pandemic. The Pan African financial institution was able todeliver growth in its gross earnings which rose to N300.6bn up from N294bnrecorded in the same period of 2019.
According to its resultsfiled with the Nigerian Stock Exchange (NSE), the Group recorded N2.2 trillionin net loans to customers, representing a 6.1% growth even as deposits fromcustomers increased impressively by 25.2% to N4.8tn. Net interest income grewby 8.4% to N119.3billion, whilst net fee and commission income stood atN38.6billion representing a 7.0% increase compared to the similar period in2019.
As at June 30, 2020, theBank’s Total Assets surpassed the N6 trillion mark as it leaped to N6.8 trillion.Operating income also grew by 7.7% to N197.1 billion compared to N182.9 billionwhile profit before tax stood at N57.1bn from N70.3bn in 2019, yielding a 14.4per cent annualised return on average equity.
The bank’s Shareholders’Funds remained strong at N634.7bn up from N597.9bn in December 2019, driven bygrowth in retained earnings, a reflection of UBA’s capacity for businessgrowth. In line with its culture of paying both interim and final cashdividend, the Board of Directors of UBA Plc declared an interim dividend ofN0.17 per share for every ordinary share of N0.50 each held by itsshareholders.
UBA’s Group ManagingDirector/Chief Executive Officer, Mr. Kennedy Uzoma, Commenting on theresults, said “Our 2020H1 result is yet another demonstration of the resilienceof our business model in an extremely uncertain and tough operatingenvironment. We recorded commendable growth in our underlying business in termsof customer acquisition, transaction volumes and balance sheet whilstinflation, depressed yield environment and exchange rate volatilities impactedour net earnings as anticipated”.
Uzoka further stated,“Despite the short-term challenges to various economic sectors occasioned bythe Covid-19 pandemic, we focused on the fundamentals of businesses ingrowth-driving sectors of various economies in which we operate and achieved6.4% growth in gross loan to customers, reaching the N2.3trillion mark. TheGroup achieved N114.3 billion (a 10% YoY growth) in interest income from loansand advances to customers, as well as credit related fees andcommissions”.
He explained thatnotwithstanding the lock-down in a number of countries and the general lull inseveral economic sectors, UBA’s banking channels remained open to customers‘24/7’, adding that “Fortunately, we had proactively built robust electronicchannel platforms to enable us serve customers efficiently, and deliverservices to them in the comfort of their homes. Notably, we are adjusting ouroperating model in response to the ‘new normal’ and will continue to optimisethe way we work and serve customers in the days ahead.”
He expressed confidence inthe bank’s capacity to deliver good returns to shareholders: “we remaincommitted to our drive as ‘Africa’s Global Bank’ and confident of claiming andsustaining industry leadership on key metrics across geographies where weoperate. We will strive to deliver our services in a sustainable way,ultimately leveraging our best-in-class digital capabilities to delight our 21million (and growing) customers across 23 countries.”
Also speaking on the results,UBA’s Group CFO, Ugo Nwaghodoh said, “Our H1 2020 results reflects theinherent benefits of diversification as we have seen marked growth incontribution from the subsidiaries across Africa. Our Rest-of-Africa operationshave continued to break new grounds in market share gains, providing a bufferfor Group earnings. As the global and local economies begin toimprove, we remain optimistic of a better performance in the second half of theyear, with expected improvement in the Group’s NIM and ROAE which stood at 5.4%and 14.4% respectively as at end of H12020.
“We defensively positionedour loan portfolio whilst we grew gross loans by 6.4%, maintaining our prudentrisk appetite, even as NPL ratio for the Group moderated to 4.1% (from 5.3% in2019FY). We have prudently set-up reserves for loan impairments in recognitionof potential losses on the portfolio, resulting in 150% growth in ourprovisioning. Albeit, cost of risk moderated to 0.7% from 0.9% in 2019FY. TheGroup’s capital adequacy ratio increased to 24.9% providing a very strongbuffer for asset growth. We remain committed to maintaining our robust riskmanagement practices, as profitable growth and good asset quality remain ourpriority in 2020,” he noted.