Africa’s leading financial institution, United Bank for Africa (UBA) Plc, has announced its audited financial results for the half year ended June 30, 2020, showing commendable growth across key performance indices as well as increased contribution from its African subsidiaries.
Notwithstanding the challenging business and economic environment occasioned by the Covid-19 pandemic, the pan African financial institution was able to deliver growth in its gross earnings which rose to N300.6bn up from N294bn recorded in the same period of 2019.
According to its results filed with the Nigerian Stock Exchange (NSE), the Group recorded N2.2 trillion in net loans to customers, representing a 6.1% growth even as deposits from customers increased impressively by 25.2% to N4.8tn. Net interest income grew by 8.4% to N119.3billion, whilst net fee and commission income stood at N38.6billion representing a 7.0% increase compared to the similar period in 2019.
As at June 30, 2020, the Bank’s Total Assets surpassed the N6tn mark as it leaped to N6.8 trillion. Operating income also grew by 7.7% to N197.1bn compared to N182.9bn while profit before tax stood at N57.1bn from N70.3bn in 2019, yielding a 14.4 per cent annualised return on average equity.
The bank’s Shareholders’ Funds remained strong at N634.7bn up from N597.9bn in December 2019, driven by growth in retained earnings, a reflection of UBA’s capacity for business growth. In line with its culture of paying both interim and final cash dividend, the Board of Directors of UBA Plc declared an interim dividend of N0.17 per share for every ordinary share of N0.50 each held by its shareholders.
Commenting on the results, UBA’s Group Managing Director/Chief Executive Officer, Mr. Kennedy Uzoka said “Our 2020H1 results is yet another demonstration of the resilience of our business model in an extremely uncertain and tough operating environment. We recorded commendable growth in our underlying business in terms of customer acquisition, transaction volumes and balance sheet whilst inflation, depressed yield environment and exchange rate volatilities impacted our net earnings as anticipated.
He further stated, “Despite the short-term challenges to various economic sectors occasioned by the Covid-19 pandemic, we focused on the fundamentals of businesses in growth-driving sectors of various economies in which we operate and achieved 6.4% growth in gross loan to customers, reaching the N2.3trillion mark. The Group achieved N114.3 billion (a 10% YoY growth) in interest income from loans and advances to customers, as well as credit related fees and commissions.
Uzoka explained that notwithstanding the lock-down in a number of countries and the general lull in several economic sectors, UBA’s banking channels remained open to customers ‘24/7’, adding that “Fortunately, we had proactively built robust electronic channel platforms to enable us serve customers efficiently, and deliver services to them in the comfort of their homes. Notably, we are adjusting our operating model in response to the ‘new normal’ and will continue to optimise the way we work and serve customers in the days ahead.”
He expressed confidence in the bank’s capacity to deliver good returns to shareholders: “we remain committed to our drive as ‘Africa’s Global Bank’ and confident of claiming and sustaining industry leadership on key metrics across geographies where we operate. We will strive to deliver our services in a sustainable way, ultimately leveraging our best-in-class digital capabilities to delight our 21 million (and growing) customers across 23 countries.”
Also speaking on the results, UBA’s Group CFO, Ugo Nwaghodoh said “Our H1 2020 results reflects the inherent benefits of diversification as we have seen marked growth in contribution from the subsidiaries across Africa. Our Rest-of-Africa operations have continued to break new grounds in market share gains, providing a buffer for Group earnings. As the global and local economies begin to improve, we remain optimistic of a better performance in the second half of the year, with expected improvement in the Group’s NIM and ROAE which stood at 5.4% and 14.4% respectively as at end of H12020.
“We defensively positioned our loan portfolio whilst we grew gross loans by 6.4%, maintaining our prudent risk appetite, even as NPL ratio for the Group moderated to 4.1% (from 5.3% in 2019FY). We have prudently set-up reserves for loan impairments in recognition of potential losses on the portfolio, resulting in 150% growth in our provisioning. Albeit, cost of risk moderated to 0.7% from 0.9% in 2019FY. The Group’s capital adequacy ratio increased to 24.9% providing a very strong buffer for asset growth. We remain committed to maintaining our robust risk management practices, as profitable growth and good asset quality remain our priority in 2020,” he noted.
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Access Bank To Acquire $300m Worth Angolan Firm, Finibanco
Access Bank has signed an agreement to acquire 51% majority shareholding in Finibanco Angola S.A from Montepio Holding SGPS S.A, the parent company, Access Holdings Plc revealed.
The Nigerian commercial bank purchased existing shares owned by Montepio, the holding company for Banco Montepio, a Portuguese commercial bank.
This will increase the number of branches under Access Bank, which has been ranked as the largest commercial bank in Africa by number of customers. Finibanco have over 20 branches, with a total assets worth $300 million.
Access Bank has been acquiring banks in other African countries to expand its payment gateway between the African and global market trades.
The Nigerian lender had acquired Kenyan lender, Sidian Bank Ltd, African Banking Corporation of Botswana Limited, African Banking Corporation Zambia Limited, as well as Cavmont Bank.
According to a statement by Access Holdings, “The Transaction, which is subject to regulatory approvals in Nigeria and Angola is expected to close in the first half of 2023 following fulfillment of customary conditions precedents.
“It will be consummated at 1.0x tangible book value less pre-agreed adjustments to be determined by a customary completion audit. Upon completion of the Transaction, the Bank is expected to increase its shareholding in Finibanco S.A and has reached certain conditional agreements in this regard.” The statement reads.
The Group Chief Executive Officer of Access Holdings, Herbert Wigwe, said, “At Access, our vision remains clear as ever and our determination to harness accretive opportunities within and outside Nigeria is our core strategic focus.
“Angola represents an opportunity for our shareholders to participate in what we believe will engender stronger value upside as Africa fully emerges.
“We remain committed to making these disciplined and well-structured investments towards creating a strong, holistic platform that will be competitive, diversified, and compelling for years to come.”
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UBA Foundation Receives Leadership Award In Corporate Social Responsibility
Africa’s global bank, the United Bank for Africa’s Foundation was recognised as a leader in Corporate Social Responsibility at the 10th anniversary of the Marketing Edge brands and advertising excellence awards in Lagos.
The highly impactful initiatives of the UBA Foundation such as the annual National Essay Competition; Read Africa; Each Teach One; the Food bank, amongst others, are being cascaded across the African continent to reach more people every year.
Through its essay competition initiated more than nine years ago, hundreds of students have received grants to study at tertiary institutions in Africa and the ripple effects are being felt within their communities as more children get a chance to go to university.
Speaking on the leadership award UBA Foundation CEO, Bola Atta noted that there is a lot of work to be done to improve lives.
“We are doing this one step at a time and in different countries across the geography where the United Bank for Africa operates. It is fundamental for people and organisations to give back.
“It is also very African to nurture one’s communities and uplift others around you. So we do what we do with a lot of passion and focus on developing and nurturing’.
Emphasising one of the key initiatives of the Foundation, the National Essay Competition, Atta thanked the organisers of the Marketing Edge award for excellence for the recognition.
“It is good to know we are doing it right and to be reminded that we must do even more. One of my favourite initiatives at the Foundation is the National Essay Competition because I have seen first-hand how it changes lives.
“The award we are receiving is for all the children across Africa who are aspiring for a better life. With the start of a new academic year, the 2022 edition has commenced and we are increasing the prizes by as much as 40%.
“The first prize winner will now receive an educational grant of N5 million to study at any African university; the second and third prizes now stand at N3 million and N2.5 million respectively. This takes into consideration the rising cost of living. We want our students to study well, worry free, so that they may excel”, Atta said.
Managing Director and Publisher of Marketing Edge, John Ajayi, commended the UBA Foundation for its strong footprint across the continent.
“Through its Read Africa Initiative and the scholarship grants, the Foundation has consistently done exceptionally well to transform the lives of many on the continent of Africa. These initiatives are truly impactful”, he stated.
Ajayi further said the awards were borne out of the need to recognise outstanding Game Changers whose relentless support has helped give hope to Africa and at the same time, drive sustainable development.
“These organisations clearly understand that agility, innovation, flexibility, decisiveness and commitment needed to accelerate the pace of change Africa craves for”.
The awards nights attracted dignitaries and Business leaders, from different industries across Nigeria.
UBA Foundation embodies the UBA Group’s CSR objectives and seeks to impact positively on societies through several laudable projects and initiatives.
The Foundation, through its education pillar, has donated hundreds of thousands of books to students in Africa under the ‘Read Africa’ initiative aimed at encouraging and promoting the reading culture in African youths.”
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CBN Raises Interest Rate To 15.5% To Fight Inflation, Attract Foreign Investors
On Tuesday, the Central Bank of Nigeria (CBN) raised its benchmark interest rate, known as Monetary Policy Rate (MPR), to 15.5 percent, the third straight hike this year.
After the two-day Monetary Policy Committee (MPC) meeting in Abuja, the CBN also raised the cash reserve ratio (CRR) to 32.5 percent from 27.5 percent. The CRR is the share of a bank’s total customer deposit that must be kept with the central bank in the form of liquid cash.
This was in consideration of the persistent rise in inflation rate and fragile growth. Nigeria’s headline inflation accelerated to the highest level in 17 years at 20.52 percent in August 2022, from 19.64 percent in the previous month.
The CBN had in the last few months increased the MPR by a combined 250 basis points to rein in inflation. In its meeting in May 2022, the CBN raised its benchmark interest rate by 150 basis points to 13 percent, the first time in six years. It raised it further in July by 100 basis points to 14 percent.
After the meeting, MPC members unanimously voted to retain other parameters. Consequently, the CBN retained the Asymmetric Corridor of +100/-700 basis points around the MPR: and the Liquidity Ratio at 30 percent.
Godin Emefiele, governor of the CBN, who announced the decision after the meeting said: “The MPC noted with concern the continued aggressive movement in inflation, even after the rate hike at its meeting in May and July 2022, and expressed its unrelenting resolve to restore price stability while providing the necessary support to strengthen the fragile recovery.”
It is expected that the hike in interest rate for three consecutive times will also lure foreign inflows into the country and ease the pressure on the naira.
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