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    Saturday, September 11, 2021

    UBA Records 33% YoY Profit Growth in H1’21

    Africa’s leading financial institution, United Bank for Africa (UBA) Plc, released its audited half year financial results for the half year ended June 30, 2021, which shows an impressive growth across all major income lines and performance indicators.

    According to the report, the core income segment supported this performance, driven mainly by improvements in funding cost as non-core income contrastingly declined year-on-year.

    Consequently, the report disclosed that the bank recorded an EPS of N1.69 in 2021 compared with N1.24 in 2020. The report contained a declaration of an interim dividend of N0.20 per share representing 17.6% growth from N0.17per share in 2020.

    The bank, also recorded a 8.3% year-on-year growth in interest income to N222.63 billion as all major lines recorded gains while interest on loans and advances to banks growth by 377.6% year-on-year to N10.38 billion, followed with investment securities which soared up by 5.1% year-on-year to N87.24 billion, while loans and advances to customers also jumped by 4.0% year-on-year to N118.44 billion and cash and bank balances growth by1.4% year-on-year to N6.57 billion. Expectedly, the growth in income from investment securities was strong considering the reinvestments of maturing funds in higher-yielding instruments compared to levels obtainable in the prior quarter. Likewise, growth in loans to banks and customers soared by 96.3% and 4.1%, respectively significantly contributed to the strong performance.

    Nevertheless, interest expense declined by 13.6% year-on-year to N74.56 billion as the bank recorded moderations across all contributory lines save for expense on interest-bearing liabilities up by 26.7% year-on-year to N25.07 billion. The largest decline was recorded on interest expense on deposits from customers down by 20.5% year-on-year to N42.43 billion as the bank’s CASA mix improved in six months 2021 of 84.3% to 2020 Full Year of 81.8%.

    Consequent to the income growth and declining expenses, the bank recorded an expansion in net interest income up by 24.1% year-on-year, further supported by the significant decrease in loan loss expenses down with 7.0% year-on-year to N4.14billion. Eventually, net interest income settled 29.1% higher year-on-year at N143.93billion.

    Nonetheless, non-interest income declined during the period by 16.8% year-on-year to N64.38 billion, driven by FX revaluation which was down of N2.84 billion compare with 2020’s gain of N8.00 billion and derivatives declined to N5.27 billion to the six months in 2020’s gain which stood at N9.43 billion as well as the decline in gains from investment securities by 55.5% year-on-year to N1.96 billion. The aforementioned offset the growth in net fees and commission income up by 18.6% year-on-year to N45.77 billion; a consistent trend observed across the industry as electronic banking transaction volumes improve.

    According to the report, operating expenses closed relatively flat, growing moderately by 0.5% year-on-year, as increasing regulatory cost pressures from NDIC premium which soared by 27.3% year-on-year to N7.11 billion and AMCON levy up by 24.1% year-on-year to N27.82 billion were offset by moderations in personnel, building maintenance and business travel expenses.

    Consequently, the bank’s operating income up by 10.3% year-on-year advanced faster than opex, leading to an improvement in operational efficiency while cost-to-income ratio settled lower at 63.8% relative to 69.9% in the prior year’s corresponding period.

    “Overall, profitability was more robust, with profit-before tax recording a 34.2% year-on-year growth to N76.19 billion while profit-after-tax came in 36.3% higher at N60.58 billion despite the higher income tax expense up by 26.4% year-on-year to N15.61 billion.

    Experts at Cordros Research in their comment says the bank’s performance remains impressive given the challenging core business environment. 

    They envisage this strong earnings growth would remain till full-year, given our expectations of sustained momentum in the acceleration of loans and higher yields obtainable to reinvest maturing assets. Analysts also expect the bank’s continued improvements in operational efficiency to propel earnings further.

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