…Declares 56% PAT growth, 20 kobo interim dividend
Alabingo Finance Report || United Bank for Africa (UBA) leveraged on the relative stability in Nigerian foreign exchange market to strengthen its financial performance in the second quarter of 2017, resulting in its shareholders smiling to the bank with 20 kobo interim dividend at the end of the day.
A review of the banks showed a 56.19 percent appreciation in its post-tax profit to N42.34 billion in H2 2017, underpropped by 238.43 percent growth in forex trading income to N19.62 billion, 170.57 percent increase in fixed income securities to N5.61 billion and as was as a substantial -95.70 percent slice of the lender’s forex revaluation loss to N179 million from N4.17 billion in reversed period in 2016.
The country’s forex market has been enjoying some stability since the Central Bank of Nigeria commenced aggressive intervention in February, injecting over $10 billion into the market so far and introduced the Nigerian Autonomous Foreign Exchange (NAFEX) also known as Investors’ and Exporters’ Forex (I&E Forex) window. The naira had hit record N525 against the dollar in February before the apex bank took these drastic measures, which has brought about convergence between the NAFEX window and the parallel market, where the currency has been exchanging N360-N370 to a dollar.
UBA H1 2017 performance was sterling as it succeeded in leveraging on foreign exchange and also grew its interest income at double-digit, especially interest expense didn’t increase proportionally, said Mr. Robert Omotunde, a financial analyst with Afrinvest West Africa Limited. “It African approach seeks to be giving it should leverage as a reasonable chunk of its revenue come from other African operations,” he also noted. He expressed optimism that most banks would sustain their good performance at the end of the year.
UBA saw its gross earnings climbed 34.51 percent to N222.72 billion on the back on 44.25 percent rise in interest income to N154.95 billion and 44.09 percent increase in other income to N28.29 billion, although, fee and commission earnings slipped marginally -1.27 per cent to N36.47 billion (H1 2016: N36.94 billion), due to -45.92 percent decline in electronic banking income.
The bank raised significant chunk of its interest income from term loans which grew 59.90 percent to N74.73 billion in the first six months of this compared to N46.74 billion in the same period in 2016. There was also a whopping 456.06 percent increase in its loans to and advances to bank to N1.47 billion (H1 2016: N264 million).
It cost UBA 23.77 percent more (H1 2017: N53.58 billion versus H1 2016: N43.29 billion) to realized its interest income and despite drop in fee and commission income, the bank spent 20.79 percent higher to achieve this (H1 2017: N7.37 billion against H1 2016: N6.10 billion), because of 22.43 percent and 337.35 percent rise in E-Banking and trade-related expenses respectively.
And the bank, which boasts of one of the lowest non-performing loans (NPL) in the Nigerian banking industry, made N9.44 impairment provision during the period under review, which was 38.41 percent higher than N6.82 billion it provided for toxic loans in H1 2016. The lender has seen steady rise in its NPL, worsened by the five quarters of economic recession, which Nigeria suffered. However, its NPL ratio remains impressive, standing at 0.6 percent at the end of June.
The bank’s total assets grew 5.30 percent to N3.69 trillion with loans and advances to customers increasing 3.65 percent N1.56 trillion, while loans and advances to banks almost halved to N11.51 billion. On the other hand, UBA total liabilities upped 4.93 percent to N3.21 trillion, following 28.01 percent rise in deposits from banks to N139.63 billion, but a slight -1.49 percent decline in deposits from customers to N2.45 trillion in H1 2017.
The Kennedy Uzoka-led bank is few of the commercial lenders in Nigeria that has taken advantage of the African market as more than of 18 percent of its N42.43 billion profit for the period came from other African countries.
Its earnings per shares appreciated 55.13 percent to N1.21 from N0.78 in H1 2016.
UBA share traded for N8.91 on Monday, which was -15.06 percent lower than its 52-week high of N10.49 it attained on July 27, 201