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UBA Plc posts outstanding FY-2017 results, jumps PAT to N78.59bn

Leading Africa’s global bank, United Bank for Africa Plc (UBA) released its FY-2017 results recently, showing growth in top and bottom line items – Gross earnings (+20.31% to NGN461.56 billion) and PAT (+8.75% to NGN78.59 billion).

The results clearly rubbished several analysts’ estimates including Bloomberg’s polled estimates and others.

The bank moved its net interest income to 25.69% higher than the previous year’s at NGN207.63 billion, as interest income (+23.37% to NGN325.66 billion) grew at a faster pace than interest expense (+19.49% to NGN118.03 billion).

Accordingly, NIM improved by 51 bps to 7.61% (higher than our 7.10% forecast). This was supported by 59 bps improvement in asset yield to 11.94%; whereas, cost of funds declined by 3 bps to 3.70%.

Besides, NIR also increased during the year by 12.53% to NGN118.93 billion, owing to growths in Net fee and commission income (+11.42% to NGN65.97 billion), Net trading income (+11.96% to NGN49.06 billion), and other income (+46.79% to NGN3.90 billion).

Whereas loan impairment charges rose by 18.83% during the year to NGN32.90 billion, the cost of risk increased by 16 bps to 2.01%.

However, operational expenses of the Kennedy Uzoka led financial giant was also higher by 23.68% at NGN188.61 billion (4.53% lower than we estimated), with a cost-to-income ratio of 57.76%, coming 146 bps higher than last year.

Again, while pre-tax profit increased by 16.13% to NGN105.26 billion, higher effective tax rate (+506 bps) of 25.34%, drove a slower growth in the post-tax profit (+8.75%) of NGN78.59 billion.

The result indicated that in the last quarter of the year (Q4-17), improvements in key income lines – interest income (+5.32% q/ and +8.13%y/y), fee and commission income (+16.96% q/q ad +47.50%y/y), net trading income (+136.01%q/q and -24.89%) – supported growth in Gross earnings (+14.81%q/q and +8.07%y/y).

Net interest income (+8.67%q/q and +4.16%y/y) grew to NGN55.34 billion, with interest income (+5.32%q/q and +8.13%y/y) and interest expense (+0.03% q/q and +15.71% y/y) increasing to NGN325.66 billion and NGN118.03 billion respectively.

Observed upturns in net fee and commission income (+9.79% q/q and +34.53% y/y) and trading income (+136.01% q/q, -24.89% y/y), muted the marginal decline in other income (-0.45% q/q and -39.02% y/y), causing the NIR to increase to NGN34.33 billion (+41.83% q/q and -0.49% y/y).

Within the period, provision for loan impairment surged 476.30% from the previous quarter to NGN19.99 billion (+7.54% y/y).

Just as operational expenses was 15.69% lower from the previous quarter at NGN42.91 billion (+7.38% y/y), driven by the decline in other operating expenses (-27.06% q/q and +14.88% y/y), tax charge for the quarter surged by 318.84% q/q to NGN9.27 billion (+1.95% y/y), causing PAT to decline by 4.90% q/q to NGN17.67 billion (-11.59% y/y), from a PBT of NGN26.94 billion (+29.55% q/q and -7.36% y/y).

Accordingly, a final dividend of NGN0.65 was declared, bringing total dividend for the year to NGN0.85/share (2016: NGN0.75/share).

Industry analysts are of the view that UBA within the period performed fairly, as key line items – particularly the gross earnings and PAT – showed time-relative improvements, and broadly in line with expectations.

Experts envisage muted reaction in trading today, Monday, March 26, 2018 at the floor of the Nigerian Stock Exchange (NSE) on the UBA results.

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