United Bank for Africa headquarters
As the United Bank for Africa Plc bounced back to profitability with an impressive 905 percent gains in its 2012 results, the bank, which once occupied the number three position in ranking. may have begun its journey back to the top of the ladder, reports Festus Akanbi
Except for few banks, whose results are still being awaited by members of the investing public, the performance of the various publicly quoted financial institutions for the 2012 operations could be described as very impressive.
This is because apart from the sterling performances of these banks, which reflected in various indices including higher profit after tax, improved shareholders fund and reduced costs of doing business, there is also a significant improvement in the way the banks impact on the economy as a whole.
For instance, most of the banks recorded a leap in the volume of cash deposits and in some cases, in lending to the economy.
Back to Profitability
One of such banks is United Bank for Africa Plc. Investment analysts that reviewed the bank’s result last week are of the opinion that the management of UBA had indeed set a definite goal for itself and had demonstrated the potential to realise it.
Perhaps, the greatest feat was the ability of the bank to grow its profit figures by over 905% to close at N54.8billion from the N6.8billion loss it recorded in the previous year on account of loan provisioning that it did to clean up its balance sheet.
To the group managing director and chief executive officer of the bank, Mr. Phillips Oduoza, it was an excellent performance foretold.
Oduoza had in a presentation of the first nine months performance for 2012 sometimes last year, expressed the resolve of the management of the bank to put smiles on the faces of its numerous shareholders who had bemoaned the loss position of the bank in the previous year.
The return to profit threshold in its 2012 result was therefore a heart-warming development to thousands of shareholders of the bank when the bank presented its scorecard for 2012 operation to members of the public last week.
Details of the result released at the Nigerian Stock Exchange to stockbrokers and the financial community show improvement in all indices in a performance that has seen the complete turnaround of the pan–African financial services institution.
Profit before tax rose over 295% to N52.00billion in 2012, compared with a loss of N26.60billion in the previous year, whilst total comprehensive income attributable to equity holders grew outstandingly by 5,058% to N55.53billion, compared with a loss of N1.12billion in 2011.
Gross Earnings in 2012 for UBA grew significantly by 34.45% increase to peak at N220.1bn; representing approximately N56.40billion additional revenue from the N163.7bn achieved in the preceding year while the bank was able to keep total operating expense lower by 3.30% in the same period under review.
The bank also recorded a total Asset of N2.273trillion, compared with N1.920trillion (an increase of 18.39%), while its total liabilities was N2.080trillion, compared with N1.769trillion (an increase of 17.58%). • Total equity of the bank for the period under review was N192.47billion, compared with N150.94billion (an increase of 27.51%).
The international financial advisory firm, Renaissance Capital that review the bank’s result noted that UBA’s net loans went up 9% YoY to N659bn, in line with Zenith and GTB (up 11% and 10% respectively) but below First Bank (up 23%).
“Deposit growth was strong at 19% YoY with QoQ, growth at 7%. We do not have a breakdown of the mix but we know that as at 9M12 UBA had bucked the trend and showed an improvement in the mix with term deposits at 17% of the book, down from 22% in FY11. Loan deposit ratio dropped even lower to 38%, from 42% in FY11. Total assets increased by 18% YoY to N2.3trillion.”
Rencap described the lower costs recorded by the bank in 2012 as a positive surprise throughout the year. Operating costs were down 3% YoY, largely on the back of a 9% decline in employee costs. On our numbers the group reported a Cost Income Ratio of 64%.
“In our opinion, with costs/assets at a commendable 4.9%, we believe the key to bringing the ratio down even further must now come from faster revenue growth ahead of further cost reductions.
“Overall, these numbers cement UBA’s turnaround year after losses recorded in FY11. We believe the challenge is now to drive faster revenue growth by increasing the level of risk assets,” Rencap said.
An elated Oduoza stated, “We achieved those results despite a tough operating environment, demonstrating the strength and resilience of our business model.
UBA had a strong year in 2012. Our success was again driven by the strength of our customer-focused, corporate and treasury driven business model. We are confident about our ability to deliver sustainable earnings growth in the future. We will continue to strategically invest in our businesses, manage our expenses and contain cost, while continually seeking ways to exceed expectations of our stakeholders.”
But like a good manager of men, Oduoza attributed the sterling performance to the commitment and determination of the staff of the bank
Good Customer Service Delivery
Also commenting on the results, the Group Chief Finance Officer Mr. Ugochukwu Nwaghodoh said the bank has continued to focus on customer service delivery, efficient capital management and returns maximisation with return on equity exceeding 30 per cent in 2012, one of the highest in the industry.