..Declares dividend of N0.55
United Bank for Africa (UBA) Plc full year profit has upturned 21.13 percent, thanks to foreign exchange revaluation gains and income from electronic banking despite poor performance from oil companies it depend on.
Analysts say the lender’s excellent risk management strategy, strong earnings and a solid capital buffer makes its stocks attractive to investors.
The stellar performance amid a turbulent 2016 means shareholders wealth has been maximized and resources owners have been deployed to generate higher profit.
For the year ended December 2016, UBA’s net income increased by 21.13 percent to N72.26 billion as against N59.26 billion the previous year. Gross earnings moved 21.29 percent to N383.61 billion in the period under review.
The growth in earnings amid turbulence 2016 was underpinned by a 16.02 percent rise in interest income on term loans to N126.13 billion and a 34.05 percent increase in investment securities and bonds.
The devaluation of the naira by the central bank as a result of the adoption of a flexible exchange rate regime last year, which saw the naira lose 40 percent of its value against the U.S currency, was a boon for UBA as it made a foreign exchange revaluation gain of N15.13 billion.
UBA has targeted retail clients using low costs electronic channels to boost profit as its electronic banking income increased by 67.39 percent to N30.46 billion.
Nigerian banks have been using the electronic retail banking network to boost loan growth and overcome the headwinds caused by low oil price and a severe dollar shortage.
With the use of such technology, lenders enable customers to make payments such as phone top ups and air tickets fees via internets.
UBA recorded a 45.63 percent increase in loans and advances to customers to N1.50 trillion in December 2016 from N1.03 trillion as at December 2016; thanks to the devaluation of the naira.
The Nigerian lender has declared a dividend of N0.55 on each ordinary share held by its owners. This translates to a dividend yield of 11.59 percent.
The African Development Bank Group, AfDB, and United Bank for Africa Plc, UBA, on November 30 signed a $150 million loan agreement to finance infrastructure and SME projects, including women-owned enterprises in Nigeria.
Analysts say there could be an improvement in banks assets quality on the back of improved revenues from oil companies as the relative calm in the Niger Delta region.
Also, the decision by OPEC to cut oil output has seen oil price rebound. This means oil majors will have more money to pay back monies owed to banks.
Militants in the oil rich Niger Delta has vandalized pipelines over a dispute with the Federal Government regarding unpaid stipends.
UBA share price closed at N5.85 on the floor of the exchange, valuing the lender at N195.47 billion.
BALA AUGIE
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