United Bank for Africa, (UBA) in its 9 months unaudited financial statement (9M’2022) for the period ended September 2022 reported its highest profit in ten (10) years, driven by a 22.3 percent year-on-year (y/y) growth in interest income to N420.2 billion and 24.9 percent year on year growth in its non-interest income to N131.88 billion.
The growth in interest income was driven mainly by the increase in interest income on loans and investment securities, which grew by 16 percent to N217.8 billion from N187.06 billion in September 2021 and 27 percent to N165.3 billion in September 2022 from N130.5 billion in September 2021, respectively.
Non-interest income, on the other hand, was driven by a 40.6 percent increase in net trading and foreign exchange income which amounted to N38.4 billion in September 2022 from N110.9 billion in September 2021.
Net fee and commission income were up 21.1 percent y/y to N82.2 billion in September 2022 from N67.9 billion in September 2021. The y/y growth was driven by growth in trade transaction income and credit-related fees which grew by 76.2 percent and 58.2 percent respectively.
E-banking Income, which made up 34.7 percent of fees and commission was up 14.4 percent y/y to N47.96 billion, albeit capped by high e-banking expense of N45.7 billion, thus resulting in a balance of only N2.2 billion for net e-banking income.
Quarter on quarter, net fee and commission declined by 37.4 percent in Q3 compared with Q2 2022 driven by the 72.9 percent decline in credit-related fees in Q3 compared with Q2.
Consequently, profits grew by 10.95 percent to N116.04 billion in the 9 months period ended September 2022 from N104.59 billion in the corresponding period of 2021.
Interest Expense on the other hand was up 20.3 percent y/y to N137.72 billion in September 2022 from N114.44 billion in September 2021 but grew strongly in the third quarter (Q3) compared with the second quarter (Q2), up 45.7 percent quarter on quarter.
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The y/y growth was on the back of the significant increase in interest expense on both customer deposits and deposits from banks.
Interest expense on deposits from customers was up 26.4 percent to N99.2 billion in September 2022 from N78.5 billion in September 2021, while interest expense on deposits from banks was up 155 percent to N17.2 billion in September 2022 from N6.72 billion in September 2021.
The impairment charge on loans and receivables was up 299 percent year-on-year to N13.6 billion in the 9 months period ended September 2022, bringing annualised cost of risk (COR) to 0.6 percent compared with 0.1 percent for the corresponding period of 2021.
The bank’s total operating expenses were up 27.47 percent to N262.6 billion in the 9 months period ended September 2022 from N206.01 billion in the corresponding period of 2021.
The slightly higher yearly increase in operating expenses compared with a 24.9 percent growth in total operating income led to a slight deterioration in the cost-to-income ratio (ex-provisions) to 63.4 percent for the 9 months period ended September 2022 compared with 62.1 percent in the same period last year.
Major growth drivers for operating expenses were a significant growth in employee benefit expenses, which grew to N80.8 billion in September 2022 from N66.5 billion in 9M 2021. This, according to the management was due to investment in staff training.
Total assets reported by UBA grew by 11.6 percent to N9.31 trillion in September 2022 from N8.35 billion in September 2021.
Net loans to customers were up 6.17 percent in September 2022 to N3.05 trillion compared with N2.87 billion reported in September 2021.
Similarly, customer deposits were up 15.5 percent to N7.02 trillion in September 2022 from N6.08 trillion in September 2021, pointing to an increase in funding costs.
Cash and cash equivalents held by the bank surged by 109 percent to N950 billion in the nine months period ended September 2022 from N454 billion in the corresponding period of last year.
Net cash flow from operations, however, was down by 13.22 percent to N481.54 billion in September 2022 from N554.91 billion in September 2021.
Net cash flow from investing activities amounted to N29.5 billion in September 2022 from N-501.6 billion in September 2021.
The bank generated cash from the proceeds of the sale or redemption of investment securities which amounted to N929 billion, and proceeds from the sale of property, plant, and equipment of N1 billion.
UBA spent N875 billion purchasing investment securities, and N20 billion purchasing property, plant, and equipment.
Its net cash flows from financing activities were negative N281 billion during the period, largely due to N396.6 billion spent to repay borrowings, N22 billion interest on borrowings paid, and N34 billion dividend paid.
During the period, the bank, however, received cash of N162 billion, and N10.55 billion from the proceeds it got from borrowings and payment of principal on leases, respectively.
In the nine months period that ended September 2022, UBA reported earnings per share of N3.27 per share.
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