• Sunday, May 26, 2024
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UBA: What to know ahead of May 24 shareholders meeting

UBA to seek shareholders approval for capital raise

When the shareholders of United Bank for Africa Plc (UBA) meet on May 24 in Abuja, Nigeria, the Board of Directors of the banking group will among other businesses of that day be seeking shareholders approval for raise capital.

In the recent notice of shareholders meeting, UBA said that the Board of Directors of the Company will seek approval from shareholders to raise additional capital through the issuance of securities comprising ordinary shares, preference shares, convertible and/or non-convertible notes, bonds, or any other instruments, in the Nigerian and/or International Capital Markets.

United Bank for Africa Plc recently released its audited results for the year ended December 31, 2023, which showed exceptional and impressive performance across all its major indicators.

In 2024, the Group remains committed to sustainable growth and maintaining its strong compliance and risk management practices culture even as it drives its business through the next phase of growth.

Oliver Alawuba, Group Managing Director/Chief Executive Officer, UBA said: “I am very pleased with the unprecedented results achieved by our Group in FY2023. The Group made a profit before tax of N758 billion from N201 billion in the prior year. The balance sheet also grew to N20.7 trillion from N10.8 trillion in the previous year”.

He said, “The Group’s shareholder’s funds crossed N2 trillion from N922 billion in 2022, whilst total assets crossed the N20 trillion mark (90.2 percent YoY growth). The Group is well positioned for further business expansion in FY2024 having closed FY2023 with a Capital Adequacy Ratio of 32.6 percent.”

He added that the bank’s diversified business model (Pan-African and International strategy) is justified by the contribution of its Ex-Nigeria business to the Group’s results and reinforces its resolve to expand its market share of customers, funding, digital and transaction banking businesses across Africa.

“Driven by our customer service and execution-led delivery model, we will continue to expand our market share, create value for our shareholders and meet the expectations of our various stakeholders,” the GMD stated.

In the notice of the AGM, UBA noted the capital raise will be either as a standalone issue (s) or by the establishment of capital raising programmes, whether by way of Public Offerings, Private Placements, Rights Issues and/or other transaction modes, at prices, coupon or interest rates determined through book building or any other acceptable valuation method or combination of methods, in such tranches, series or proportions, within such maturity periods and at such dates and upon such terms and conditions “as may be determined by the Board of Directors of the
Company subject to obtaining the requisite approvals of the relevant regulatory authorities”.

It was also noted that the capital raise referred above may be underwritten on such terms as may be determined by the Board of Directors of the Company subject to the approval of the relevant regulatory authorities.

UBA also said its Board will also seek shareholders approval for the Issued Share Capital of the Company to be increased from N17.099billion divided into 34,199,421,366 ordinary shares of N0.50 Kobo each to N22.5billion by the creation of 10,800,578,634 new ordinary shares of N0.50 Kobo each ranking pari-passu with the existing ordinary shares of the Company.

The Board will be seeking approval from shareholders to take the necessary steps, if deemed appropriate, to cancel any unallotted shares of the Company or to further increase the share capital of the Company to an amount sufficient to accommodate any transaction undertaken by the Company to raise additional equity capital.

That any shares not taken by existing shareholders within the period stipulated under the Rights Issues may be offered for sale to other interested shareholders of the Company on such terms and conditions as may

The Directors, following approval of the shareholders after the May 24 meeting will among others be required to appoint professional parties and advisers, perform all such other acts and do all such other things as may be necessary to give effect to the above resolutions, including without limitation, complying with the directives of any relevant regulatory authority.

UBA experienced robust trading activity in 2023, with 9.63 billion shares exchanged, representing 28.2 percent of the shares outstanding.

The broader Nigerian equities market ascended to a 15-year peak amidst market-friendly reforms and buoyant corporate performance.

The NGX All-Share Index closed at a record high of 74,773.77 points, representing a substantial 45.90 percent year-to-date (YtD) gain from its opening position of 51,251.06 points.

UBA concluded the year at N25.65 per share translating to a 237.5 percent YtD increase. NGX equities market capitalisation likewise witnessed a notable surge, closing at N40.92 trillion, signifying a 31.8 percent expansion from N27.92 trillion at the end of 2022.

The 2023 financials, filed by the bank at Nigerian Exchange Limited (NGX) showed an impressive leap in gross earnings, as it grew from N853.2 billion recorded at the end of 2022 to close at N2.08trilion; representing a strong 143 percent growth.

The bank’s total assets also rose remarkably by 90.22 percent, doubling the N10 trillion mark to close at N20.65 trillion in December 2023; up from N10.86 trillion in 2022. This leap remains a very significant achievement and milestone in the history of the financial powerhouse.

Despite the highly challenging global economic and business environment, UBA recorded a laudable profit before tax, with an exponential growth of 277 percent, to close the year under review at N758billion, rising from N201billion recorded at the end of the 2022 financial year; while profit after tax (PAT) grew by 257 percent from N170 billion in 2022, to N608 billion in the year under consideration.

Consequently, UBA Group Shareholders’ Funds rose from N922 billion as of December 2022 to close the 2023 financial year at N2.0tn, achieving an impressive growth of 120.2 percent compared to the prior year.

In the year under consideration, UBA Group’s cost-to-income ratio dropped from 59.2 percent in 2022, to 37.2 percent pointing to the Group’s improving efficiency.

In fulfilment of the promise made by the UBA Group Chairman, Tony Elumelu, to shareholders at the last Annual General Meeting, the bank proposed a final dividend of N2.30 kobo for every ordinary share of 50 kobo, for the financial year ended December 31, 2023. The final dividend is subject to the ratification of the shareholders during its upcoming annual general meeting (AGM).

Also worthy of note, UBA recorded a 61.3 percent growth in loans to customers, moving up to N5.5 trillion in 2023, whilst customer deposits improved by 90.31 percent to N14.9 trillion, compared to N7.8 trillion recorded in the corresponding period of 2022, reflecting increased customer confidence, enhanced customer experience, successes from the ongoing business transformation programme and the deepening of its retail banking franchise.

Following the recently released results of UBA, CardinalStone Research analysts said investors should BUY the stock.

“In its recently released FY’23 financial statements, UBA (NGSE: UBA—BUY: N42.06) reported an all-time high EPS of N17.49 (FY’22: N4.84), representing a 261.3 percent increase from the prior year. The robust increase in net fair value gain on derivatives primarily drove the strong financial outing. For context, the bank booked a material N659.3 billion gain in net trading and foreign exchange (vs N72.2 billion in FY’22), which largely reflected the passthrough impact of FX movements on the bank’s operations.

“Specifically, the breakdown showed that the increase in net trading and foreign exchange income emanated from the booked N457 billion gain in net fair value gain on derivatives, the 188.4 percent rise in foreign exchange trading income to N112.1 billion, and the 5.2x increase in FX revaluation gains to N26.6 billion”.

According to CardinalStone Research analysts, “Interest-funded income was robust, with Net interest income (NII) showing a significant appreciation of 86.4 percent year on year (YoY) to N707.5 billion. This was driven by a 93 percent YoY rise in interest income to N1.07 trillion, which effectively offset the 107 percent increase in interest expense. The rise in interest expense was due to a 93.5 percent growth in interest-bearing liabilities and a 60bps increase in cost of funds to 2.7 percent.

“The bank recorded a 2.8 percentage points (ppts) jump in its cost of risk to 3.5 percent, driven by the 7.3x surge in impairment charges on loans to N144.05 billion, which grew by 69.9 percent to N5.4 trillion. Elsewhere, the cost-to-income ratio (CIR) declined by 19.8ppts to 39.3 percent as the higher operating income of N1.6 trillion masked the 78.4 percent expansion in OPEX to N624.4 billion.

“The bank remains adequately capitalised, with a capital adequacy ratio (CAR) of 32.6 percent (FY’22:29.6 percent). The FY’23 result translates to an ROA of 3.9 percent (1.8 percent in FY’22) and an ROE of 41.2 percent (19.7 percent in FY’22). UBA has also declared a final dividend of N2.30 (FY’22: N0.8), which equates to a dividend yield of 9.1 percent (with a reference share price of N25.15),” the analysts noted further.

During the UBA financial year 2023 investor presentation held recently, Ugo Nwaghodoh, Executive Director of Finance and Risk Management explained the drivers of the Group’s growing assets, adding that shareholders’ funds crossing the N2 trillion mark provides a buffer for growth and the group’s ability to handle unexpected challenges.

He said the 2023 full year was a particularly eventful year, with galloping inflation and currency depreciation ravaging key markets amidst pockets of regional conflicts and security challenges.

“I am delighted however at the strong growth in earnings and profitability recorded in the year. The Group conservatively set up significant impairment reserves against its overall risk assets portfolio considering the latent impact of the macroeconomic headwinds on our credit portfolio. Consequently, Cost of Risk grew to 3.09 percent from 0.63 percent in the prior year,” Nwaghodoh noted.

As race to banks recapitalisation intensifies, for 2024, the group is set to achieve 20 percent growth in deposits, 20 percent growth in loans and cost of risk pegged at 3.8 percent, while non-performing loans ratio will moderate to 4.5 percent.

“UBA Plc has always grown in the business. You will see very strong net interest income growth and very strong growth in our digital offerings. One of the benefits of geographical diversification is that there are no such restrictions on our business in other jurisdictions across Africa.”

When asked about how CBN’s recapitalisation directive may affect the group, UBA was optimistic about its successful recapitalisation.

Earlier in the year, UBA surpassed N1trillion market capitalisation. The Africa’s global bank had joined the elite group of companies with market capitalisation of over N1trillion when its share price value hits N29.90 per share. The stock which closed at N24.5 per share on Monday had reached a 52-week high of N34 as against a 52-week low of N7.7.

UBA market capitalisation had hit N1.022trillion in January, making it the 3rd most capitalised financial institution in Nigeria, a remarkable lift from N283.8billion at the beginning of the 2023. The bank has 34,199,421,366 shares in issue.

Investors interest in the stock underscores the bank’s robust growth trajectory and unwavering market confidence.

Chairman, UBA Group, Tony Elumelu, said that the bank’s remarkable journey in 2023 culminated with its shares being acclaimed as the highest performing stock within the banking sector, as he pointed out that this not only highlights the bank’s strategic prowess but also reflects its commitment to delivering unparalleled value to shareholders and stakeholders alike.

“As UBA celebrates these significant milestones, we will like all our stakeholders to know that we remain steadfast in our mission to drive sustainable growth, foster innovation, and create value for its diverse clientele across Africa,” Elumelu said.

“We are witnessing the impact of the business transformation drive UBA embarked on years ago and executed well. Naturally, the market has taken note of and is duly rewarding our efforts. To our stakeholders, our promise is that we will continue to work harder, deliver on what we know how to do well and create impacts across geographies where we currently operate,” he further said.

United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than thirty-five (35) million customers, across 1,000 business offices and customer touch points in 20 African countries.

With a presence in New York, London, Paris and Dubai, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance and ancillary banking services.

Having closed FY’ 2023 with a Capital Adequacy Ratio of 32.6 percent, UBA group is well positioned for further business expansion in FY’ 2024.