Olufemi Adeyemi
United Bank for Africa (UBA) Plc's third-quarter earnings report and novel dividend payment strategy have inspired a surge in investor confidence on the Nigerian Exchange (NGX).
On Friday, the Pan-African lender's share price climbed from N25.4 at the week's beginning to N30.1, reflecting heightened investor interest in the banking group. According to data from the Nigerian stock market, UBA experienced an impressive 18.5% week-on-week growth, propelling its market capitalization to N1.029 trillion and securing its position as the third most valuable banking stock on the NGX.
In a notable departure from the prevailing dividend payment practices in the banking sector, UBA declared an interim dividend of N2 per share for the first half of 2024, significantly exceeding the offerings of its competitors.
This shift in policy has set a new benchmark for other Tier-1 banks, according to analysts from Broadstreet, who noted that the trend of paying N1 on a banking stock valued at N30 may be coming to an end, emphasizing the need for a balance between earnings and dividend growth.
For the nine-month period of the 2024 financial year, UBA reported a 17% year-on-year increase in profitability, with a profit after tax of N525.313 billion, up from N44.296 billion in the previous year.
Investor sentiment has notably improved as UBA announced the interim dividend alongside its earnings report within the same week. The financial services group has informed shareholders that the N2 interim dividend will be paid electronically to those listed on the Register of Members as of the close of business on Monday, October 14, 2024.