With Excess of N2tn Shareholders Fund, UBA Mulls Fresh Capital

Kayode Tokede

With an excess of N2 trillion shareholders fund, the management of United Bank for Africa (UBA) has disclosed that at due course, it plans to raise fresh capital in line with the Central Bank of Nigeria directives.

The Group Managing Director & Chief Executive Officer of UBA, Oliver Alawuba, reiterated this at the recent 2023 financial year investors and analysts conference call

The pan-Africa bank closed 2023 financial year with N2.03trillion shareholders fund from N922.1 billion reported in 2022. As Share capital and share premium remained flat at N17.1billion and N98.71 billion in 2023, respectively, retained earnings closed 2023 at N919.87 billion, a growth of 1114.2per cent from N429.53 billion reported in 2022.  

Alawuba expressed that the financial institution in 2024 would continue to push the frontiers of innovation and technology adoption to build significant value for shareholders through its digital banking business.

“UBA will sustain its focus on the ‘Customer’, with unique value propositions in line with the ideals of our “Customer First” (C1st) Philosophy.

“We will also continue to leverage our diversified global operations and actively manage our balance sheet in response to rapidly changing macroeconomic conditions across our various markets.”

Commenting on the UBA’s 2023 performance, he said, “Against a backdrop of challenging and volatile geopolitical and economic conditions, your Bank delivered another year of record earnings. Our gross earnings and profit before tax reached their highest levels in our history.

“Gross earnings grew year-on-year (y-o-y) by 143.3per cent to N2.1trillion and our profit before tax increased by 277.2per cent to N757.7 billion, asserting UBA’s position as a leading financial institution.

“This growth was fuelled by a significant increase in net interest income, due to a combination of a strong expansion in the loan portfolio, higher net interest margins, and a substantial contribution from foreign exchange operations. The FX operations benefited from increased business activity and improved profit margins.”

He stated that the bank was actively engaged in a comprehensive series of initiatives aimed at enhancing the performance of our Bank. Internally, stressing that the management categorize these efforts into three overarching domains: People, Process, and Technology.

The Executive Director, Finance and Risk Management, Ugo Nwaghodoh in a presentation said, “We’re guiding a full year deposit growth of about 20per cent, loan growth of about 20per cent, cost of risk of about 3.8per cent, non-performing loan ratio of about 4.5per cent, return on average equity of about 30per cent, return on assets of about three per cent, capital adequacy ratio of about 30 per cent, cost to income ratio at about 45 per cent, and net interest margins will be about 7.5 per cent.”

He noted that UBA in 2023 return on equity closed at 41.1per cent and capital adequacy ratio at 32.6per cent

“The NPL slipped from 2.95per cent to 5.85% largely because of some major classifications in some of the markets like Nigeria, Cameroon, and Congo DRC. That’s why we have that at 5.85per cent. And included in the profits for 2023 full year is the valuation gain coming from valuation of our derivative portfolio, which was about N457 billion,” he explained.

Nwaghodoh noted that the valuation of the Naira was a pivotal to some of the growth that UBA recorded on some of its balance sheet lines.

Loans and advances also up 61per cent to N5.5 trillion. Real growth on loans and advances was 15per cent and real growth on deposit was 56per cent.

“Shareholders’ funds now stand at N2.1 trillion from N922 billion. We saw significant moderation in our cost-to-income ratio, from 59per cent to 37.2per cent. And cost of risk also rose from 0.63per cent to 3.09per cent.

“The rise in the cost of risk was largely on the back of the fact that we feel that the portfolio impairment that we should carry should reflect the weakening in a number of economies and the impact of devaluation and removal of fuel subsidy, ETC, on customers’ businesses.

“And that has led to, for us, potential heightening of credit risk, which has meant that we needed to reserve much more for portfolio impairment. So, we expect that there might be some defaults somewhere down the lane, and we are reflecting all of that in the impairment numbers,” he added.