Africa Business Communities
UBA exploits more opportunities in Africa

UBA exploits more opportunities in Africa

The United Bank for Africa, UBA, business activities across its operations in Africa increased the group balance sheet in the last three quarters. The bank is offering banking services to more than seven million customers across over 700 business offi ces in 19 African countries.

Q3 performance

The bank financial results for the third quarter ended September 30, 2014, showed a 12 per cent growth in gross earnings over the same period of 2013, while gross earnings rose from N188bn in 2013 third quarter to N210bn for the nine month period ended September 30, 2014.

The bank’s gross earnings received a boost from interest income, which rose 12.5 per cent to N149bn in the same period. Its operating income stood at N138bn for the ninemonth period, representing a 6.6 per cent increase over the corresponding period of last year. This shows the strong underlying operating effi ciency of UBA business globally, and the capacity of the business to remain profi table. The bank made a profi t before tax of N42.5bn and a profi t after tax of N33.6bn for the period.

Q2 performance

The bank declared a gross earnings of 138bn for the six months ended June 31, 2014, an increase of 8.66 per cent when compared to the N127bn it declared as gross earnings for the corresponding period of 2013. The growth recorded in gross earnings was partly due to an 11 per cent increase in interest income.

Its interest income rose to N98.5bn in the six-month period from the N88.6bn it posted for the same period of 2013, while its net interest income, non-interest income and operating income appreciated.

Specifi cally, the net interest income was up 3.4 per cent to N55.2bn, non-interest income rose 3.1 per cent to N39.8bn, while operating income rose by 2.7 per cent to N92.2bn. Profi t before tax for the period, however, fell by 13 per cent to N28.9bn, from the N33.25bn it reported in the corresponding period, while its profi t after tax dropped to N22.9bn from N28.4bn.

Q1 performance

The bank posted an increase of 36.4 per cent in profi t after tax to N12.59bn in the fi rst quarter of 2014, from N9.23bn as of the fourth quarter of 2013. In line with its pace of expanding credit support to the emerging sectors in Nigeria and Africa, its loans and advances hit a record high of N1.067tn in the fi rst quarter of 2014.

The bank’s unaudited results for the fi rst quarter of 2014 showed that its gross earnings rose 8.2 per cent to N68bn in the period, from N63bn in the same period of 2013, while operating income stood at N45.5bn in the review period, a two per cent increase on the N44.6bn it posted in the fi rst quarter of 2013.

However, the bank investments in various African countries have started yielding results considering returns that majority of its subsidiaries posted in the fi – nancial year ended December 31, 2013. These investments started way back in 2005, with Standard Bank, which was one of the merging entities. After that, the bank focuses on regional growth with a strong capital.

Profitability

Driven by impressive growth in all income lines, the bank recorded gross earnings of N264bn for the 2013 fi nancial year, an increase of 20 per cent when compared to N220bn recorded in 2012. Net interest margin improved from 5.8 per cent to 5.9 per cent, while cost-to-income ratio recorded a decline from 64.8 per cent to 60.9 per cent in 2013. Profi t before tax increased to N56.1bn in 2013, from N52.0bn in 2012, an increase of eight per cent, while return on equity stood at 21.8 per cent and the bank declared a dividend of 50 kobo per share.

In 2012, 14 of the 18 branches of the bank in Africa made profi t. In 2013, 11 countries made profi t. The decline in their profi t was attributed to the roll out to various countries, as 18 countries where the bank operates outside Nigeria are mostly green fi elds. UBA Africa contributed 20 per cent to the group profi t in 2011; 18 per cent in 2012 and 22 per cent in 2013.

Liquidity

The bank total assets for the year under review stood at N2.64trn, an increase of 19.6 per cent from N2.21trn recorded in the corresponding period of 2012, while total liabilities increase to N2.41trn from N2.03trn in 2012. Total liabilities and equity rose to N2.64bn from N2.27bn in 2012.

Business Strategy

The bank set out 2013 with implementation of the strategic imperatives arising from ‘Project Alpha, which drove the growth of the bank in short to medium term, which included aggressive deposit mobilization, account acquisition and dormant account reactivation. Others are effective leverage on balance sheet to participate in emerging growth sectors, including agric, power and infrastructure; driving value chain banking, consolidating African business for market share growth and increasing focus on African trade.

Outlook

The bank synergizes its operations using opportunity cost in each of the countries. “When we get to the countries where we get license to operate, we key into their key economic drivers. When you do that some aspects will suffer, which really affects Nigeria. Now we believe that it is time to reap our investments in others countries for Nigeria to benefi t. We want a situation whereby UBA Africa will contribute 50 per cent to earning and UBA, Nigeria will do same. Therefore, there are lots of opportunities in Africa, Agriculture, and the arable farm land. We feel we should benefi t from both sides.

“Nigeria is the largest and other economies are growing rapidly too. All Nigeria business is consolidated into one, and it will be competing with Nigerian banks, while UBA as an entity will be benefi ting from both markets,” the Group Managing Director of the bank, Mr. Phillip Oduoza said.

The bank last week announced key appointments to drive its quest for industry leadership by 2015. The Project Alpha is a 3-year road map of key transformation initiatives, designed to reinforce the group’s strategic positioning and leverage its huge Africa presence to fully exploit the burgeoning opportunities in Africa’s economic renaissance.

According to Oduoza, the group has split its operations into two broad divisions, UBA Africa and UBA Nigeria, saying that UBA Africa Division will be made up of the 18 African country subsidiaries of the UBA Group outside Nigeria.

www.ubagroup.com

Share this article