UBA Wets Investors’ Appetite with Impressive Performance Across Major Indicators

Kayode Tokede

United Bank for Africa in its 2022 financial year report and accounts for period ended December 31, 2022 showed an impressive performance over the period across major indicators.

The pan-African financial institution reported significant increase in key profit & loss figures, balance sheets that eventually impacted on key financial ratios in the period under review.

The group gross earnings grew by 29.23per cent to N853.17 billion in 2022 from N660.222billion in 2021, majorly driven by the 17.48per cent and 28.77per cent growth in both interest income and non-interest income.

This was propelled by interest income on loans and advances to banks, which rose by 72.21per cent to N37.50 billion, while interest on loans to customers (corporates & individuals) also recorded a marginal increase of 4.44per cent to N263.08 billion.

Similarly, interest expense came in higher by 12.77per cent to N177.66 billion in 2022 from N157.55billion in 2021, due to the 25.25per cent increase in deposit from customers to N130.31 billion, while lease liabilities rose significantly (88.77per cent to N1.26 billion) in the period under review.

Net-interest income closed 2022 at N379.49billion, an increase of 20 per cent from N316.71billion in 2021 as the net interest margin (NIM) expanded to 5.61per cent in 2022 from 5.57per cent in 2021.

Nevertheless, UBA, historically in 2022 has a very prudent risk management framework as the group increased provisioning to account for the increasingly challenging macro environment across its regions of operations.

The group announced N19.67billion impairment charge for credit losses on loans in 2022 from N9.85billion in 2021.

For non-interest income, UBA recorded strong growth in electronic banking income as the management leveraged on state-of-the-art-technology to broaden and deepen payment solutions, and transaction volumes in the period under review.

Non-interest income hits N213.43billion in 2022 from N126.28billion in 2021.

Elsewhere, Operating expenses (OPEX) grew 25.6 per cent to N350.39billion in 2022 from N278.99billion in 2021, primarily on personnel cost, staff salaries reviewed upwards as part of broad measures to retain talent.

Employee benefit expenses increased to N113.99billion in 2022 from N93.24billion in 2021, while Other operating expenses hits N210.18billion in 2022, an increase of 29per cent from N163.04billion in 2021.

As a result, operating efficiency deteriorated slightly as the group’s cost-to-income ratio rose by 93basis points to 59.1per cent in 2022 from 62.7 per cent in 2021.

UBA closed the year under review with a profit before tax of N200.88billion, an increase of 31.2 per cent from N153.07billion in corresponding year. Profit after tax gained 44 per cent to N170.3billion in 2022 from N118.7billion in 2021.

 The management proposed a final dividend of N0.90 per share (December 31, 2021: N0.80 per share) from the retained earnings account as at December 31, 2022.

This proposed final dividend and the N0.20 per share interim dividend paid in September 2022, brings the total dividend for the year to N1.10, amounting to a pay-out ratio of 29per cent (December 31, 2021: 29pper cent), and a yield of 10.7per cent.

Considering the challenging operating environment, this performance is considered to be a very healthy and commendable one.

UBA’s balance sheet remains robust as total assets nears N11trn

The group’s balance sheet position remained stronger, driven largely by growth in investment securities, customer loans and placements.

Total assets closed 2022 at N10.86trillion, an increase of 27.1per cent from N8.54trillion reported in 2021 financial year.

Similarly, net loans grew by 21.4 per cent growth to N3.44 trillion in 2022 from N2.83trillion in 2021, whilst customer deposits rose by 23 per cent to N7.82 trillion in 2022 compared to N6.37 trillion in the corresponding period of 2021, reflecting increased customer confidence, enhanced customer experience, successes from the ongoing business transformation programme and the deepening of its retail banking franchise.

Overall, asset quality continued to show a positive trend, as the NPL (non-performing loan) ratio declined to 3.1per cent in 2022 from 3.6per cent in 2021 and was below the statutory limit of five per cent.

The reported NPL ratio is one of the lowest since 2018 as the Group maintained an effective mechanism in loan recovery.

Conclusion

Group Managing Director/CEO, Oliver Alawuba, said “notwithstanding the tight and challenging operating environment, UBA continues to deliver significant performance.

“Our record earnings, growth, and robust capital levels supported higher returns for the shareholders.  The Group is on course to achieve its strategic goals, and we are confident we will deliver our targets.

“We have navigated unprecedented macroeconomic headwinds and made significant gains in our diversification strategy and Customer 1st philosophy as we build resilience in our operations across Africa and the Rest of the World to support the mission of providing superior value to our stakeholders.”

On the outlook for 2023, he said, “we are strategically positioned to increase our market share in our countries of presence, with expansion to Dubai, United Arab Emirates and strong growth of our digital banking and payment businesses, which is pivotal to the evolving cashless economy in Nigeria.

“We strive to deliver increasingly attractive returns to our shareholders and continued positive impact in the geographies and economies in which we operate.”

UBA’s Executive Director, Finance and Risk Management, Ugo Nwaghodoh, said going by this recent performance, the bank remains on strong footing and is comfortably positioned to take on more opportunities in Nigeria, Africa and beyond.

“We are delighted with the strategic progress we have made in FY22 riding on our customers’ trust, the dedication of our people, and the support of our wider partners and stakeholders. The bank remains committed to its business development drive, prudent risk management practices, and we are optimistic to deliver best value for our stakeholders in the days ahead,” he noted.