Examining Uzoka’s Role in UBA’s Reinvention

Kennedy Uzoka

Three years in the saddle as Group Managing Director, Kennedy Uzoka, has deployed his experience and introduced innovative strategies to improve the fortunes of United Bank for Africa Plc, culminating in a growth of 32 per cent in profit for the nine months ended September 30, 2019, writes Goddy Egene

The United Bank for Africa Plc is among the banks that have announced their unaudited results for the nine months ended September 30, 2019 since the earnings season started last week. The bank which is one of the leading lenders has recorded one of the best performance among its peers, growing its profit after tax (PAT) by 32.3 per cent. That PAT growth was higher than the 29.6 per cent posted in the half year ended June 30, 2019. This implies that the bank has continued to improve despite the challenging operating environment.

In nine months of 2019, UBA recorded gross earnings of N 428.21 billion, up by 14.2 per cent from N374.82 billion in 2018. Profit before tax (PBT) grew by 24.2 per cent to N98.2 billion, up from N79.1billion in the same period of 2018, while PAT grew faster by 32.3 per cent from N61.69 billion to N81.63 billion in 2019. This profit performance puts the bank’s annualised return on average equity at 20.6 per cent.

In spite of the double digit inflation rate in Nigeria (its largest market) coupled with uncertainties in the business environment in Nigeria and in some countries in the rest of Africa, UBA’s curtailed operating expenses only increased by 8.4 per cent and this was largely due to regulatory costs.

Also, UBA continues to maintain a very strong balance sheet, with total assets of N4.96 trillion, an increase over the N4.87 trillion recorded in December 2018. Customer deposits also grew to N3.37trillion, while shareholders’ fund remained very strong at N555.53 billion, rising by 10.5 per cent and reflecting a strong capacity for internal capital generation.

Commenting on the performance, the Group Managing Director/CEO, UBA Plc, Kennedy Uzoka, said: “The resilience of our business model and our focused growth of earning assets have yielded a 10.8 per cent growth in interest income. In addition to the commendable yield on interest earning assets, we also achieved a 22.1 per cent growth in non-interest income, driven largely by the increased penetration of our superior digital banking offerings, credit expansion, remittances and other lifestyle transactional services.”

“UBA remains committed to its vision of becoming the undisputed leading and dominant financial services institution in Africa. We will continue to innovate and lead in all our business segments, whilst delivering top-notch operational efficiencies and best-in-class customer service. We are beginning to realise early gains from our ongoing Transformation Program and I am indeed excited about the days ahead,” Uzoka stated.

Also speaking, the Group Chief Financial Officer, Ugo Nwaghodoh said: “With the results achieved in the quarter under consideration, the bank remains on track to deliver its earnings target for the year. We were able to grow the loan book by 14.7 per cent, (well ahead of our guidance) focusing on growth poles of various economies in which we operate. We have also developed new credit products targeted at specific consumer and SME market segments, and will continue to do so with strict adherence to best credit/underwriting standards, as we strive to achieve the statutory loan-to-funding ratio threshold set by the apex bank.”

Analysts’ Assessment
Looking at the nine months results, analysts at Greenwich Trust Limited said the bank’s performance showed a sustained improvement in income lines when compared with the preceding quarter and corresponding period of 2018.
According to the analysts, the Tier 1 lender recorded a 24.17 per cent and 32.3 per cent increase in PBT and PAT respectively driven by improved growth in non interest income, coupled with the net interest income and deduction in tax rate.

“In terms of asset quality, loans and advances in the period under review increased by 12.86 per cent to N1.98 Billion. Total assets expanded slightly by 1.87 per cent to N4.96 trillion from N4.86 trillion in Q4 2018. However, customer deposits rose by 0.76 per cent to N3.37 trillion from N3.34 trillion in Q4 2018. For UBA, our blended target price is N15.33(previously N14.14) which is modelled on our increased quarterly expansion in loan book of 2.5 per cent(full year 15 per cent) against full year 2018 as against guidance of 10 per cent . Along with Our forward P/E x ratio of 2.12x. We recommend buy at current price. With our target price of GN 15.33, there is a potential upside of 220 per cent,” the analysts said.

Uzoka’s midas touch
Market analysts said the foundations for the current impressive performance of UBA were actually laid when Uzoka was appointed as the GMD in August 2016. According to them, the positive results being witnessed reflect the innovations, team spirit and uncommon strategies that the GMD has brought to bear in the running of the leading financial group. Uzoka was well prepared for that position and he has proved that through the performance of UBA within three years.

For instance, while he was Group Deputy Managing Director and CEO, UBA Africa he was managing the group’s country subsidiaries across 18 countries in Africa, as well as supervising three key strategic support areas in digital banking, information technology, and personal banking. He was also the executive in charge of the group’s businesses in New York and London.

An alumnus of Harvard Business School (AMP) in Boston United States, the International Institute of Management Development (IMS) in Lausanne, Switzerland and the London Business School, United Kingdom, Uzoka has brought his wealth experience to bear in the running of UBA. He is a professional member, Financial Reporting Council of Nigeria, and an honorary member of Chartered Institute of Bankers of Nigeria since 2012. And his banking career spans over two decades covering core banking, corporate marketing, strategic business advisory services and resources management. Hence, the improved performance seen so far since he became GMD.

The quantum leap seen at UBA steering the affairs of the financial institution recently fetched him the BusinessDay’s Bank Chief Executive Officer (CEO) of the Year award.
UBA’s total’s assets have appreciated by 14 per cent from N3.5 trillion in December 2016 to N4.96 trillion as at September 30, 2019, while customers’ deposits have increased by 35 per cent from N2.48 trillion to N3.37 trillion, showing growing preference for the brand. Shareholders’ funds have similarly improved by 24 per cent from N448 billion to N556 billion.

Under Uzoka’s watch, UBA expanded across the continent and beyond, meeting client’s global banking needs through its presence in London, New York and Paris.

In 2019 alone, UBA launched operations in Mali and upgrade its operation in the United Kingdom. On March 1, 2019, UBA launched its full banking operations in the United Kingdom, an expansion move that further consolidates its unique positioning as the first and only Sub-Saharan African financial institution with banking operations in both the UK and the US.

A techie himself, the GMD has ensured significant investment in the digitalisation of the bank’s activities and processes, particularly the introduction of UBA’s chatbot, LEO which is the first of its kind by any financial institutions in Africa.

Whilst presenting this CEO award to Uzoka, the management of BusinessDay Newspapers was quoted as saying: “The visionary leadership of the bank spearheaded by Uzoka has earned UBA the digital bank of the year consistently. The launch of LEO, an artificial intelligence chatbot in January of 2018 has witnessed UBA become the leader in artificial intelligence.

Leo is available on different platforms including Whatsapp, Facebook and more recently on IOS, the mobile operating system of Apple Inc.”
Receiving the award, Uzoka said the bank had been focused on putting the customer first in all its activities in the past three years.

“Our commitment to customer service excellence is translating to strong, operational and financial efficiency,” Uzoka said, reiterating the bank’s commitment to continue to put customers at the forefront of its activities.

“We are focused on adding value to the customers as we strive to give them an excellent experience at all times. We do this by having a vivid understanding of our customers and their specific needs, and by effectively monitoring their satisfaction through the feedback mechanism, and more importantly, making valuable improvements from their feedback. I am pleased to see we are increasingly becoming the bank of choice for individuals and businesses across Africa,” he said.

On the back of the launch of Leo on Apple Business Chat, UBA customers can use the services of Leo, to open an account, buy airtime, check account balance, make account transfers and pay bills.
With business chat, customers can always reach a live person and are always in control of whether they share any contact information with a business, the bank said at the launch earlier in September.

Since its introduction in 2018, Leo has effectively been replicated in 18 African countries and the list keeps growing.
Asides consistent delivery of value to UBA shareholders and excellent customer service, the lender under Uzoka has also done very well to emerge the best place to work in the last two years.

According to Jobberman, a leading recruitment platform in Nigeria, UBA was not only the best financial institution to work in Nigeria, but it also ranked second overall best firm to work in 2018.
The bank explained that to ensure that it sources, attracts, recruits, develops and retains the best talent, from around the world it ensures the provision a non-threatening environment that encourages and rewards role-model performance.

UBA also helps its workforce maintain a healthy work-life balance, provides competitive compensation and benefits that rank amongst the top-tier competitors in each of the countries it operates in.

In addition to ensuring adequate avenues for career growth and exploration – whether functional or across country lines, UBA develops a culturally diverse pool of talented professionals, with the skills and mindset to deliver excellent results, in different markets and cultures, across the African continent and beyond.