UBA’s half-year performance in 5 metrics

United Bank for Africa Plc (UBA), a tier-one Nigerian bank, recently released its 2023 half-year financial statements, which showed a robust performance.

According to BusinessDay analysis, the results revealed growth across key income areas and marked progress in expanding market share globally and in Africa.

The bank recorded a profit after tax of N378.2 billion in H1 2023, representing a leap of 437.8 percent from N70.33 billion recorded in the same period of 2022.

It reported a profit before tax of N404 billion, an increase of 371 percent compared to the N85.6 billion. This translated to an annualised return on average equity of 57.7 percent as against 17.1 percent a year earlier.

“The group recorded strong double-digit growth in revenues and profits from its operations, the result also reflects the effect of sizable revaluation gains, arising from the harmonization of currency exchange rates in Nigeria,” Oliver Alawuba, group managing director/chief executive officer at UBA, said.

Read also: Fidelity Bank completes 100% acquisition of Union Bank UK

Analysts at Cordros Securities said in a note on Wednesday that UBA’s H1 result mirrored the earnings growth across its tier 1 peers, supported primarily by the foreign exchange liberalisation implemented during the period.

“We envisage this strong earnings growth to remain by year-end, driven by the combined impact of the elevated interest rates and naira devaluation in the period,” they said.

Here are the highlights of the company’s statements

Core activity revenue

UBA’s interest income from core activities recorded a growth of 66.4 percent, reaching N428.3 billion, up from N257.4 billion, following the interest rate hikes by the Central Bank of Nigeria.

Analysts from CSL Stockbrokers said the growth was driven by interest income on investment securities and cash and bank balances.

“UBA’s H1 ’23 audited numbers showed a strong 66.4 percent year-on-year growth in Interest Income to N428.3billion driven mainly by a significant growth in interest income on investment securities and on cash and bank balances,” they said.

Non-interest income

The group’s non-interest income surged by 544.2 percent to N505.9 billion from N78.5 billion.

Read also: Zenith Bank’s half-year profit more than doubles to N350bn

This growth can be attributed to higher income generated from FX revaluation gains (N29.2 billion), net fees and commissions (N78.3 billion), and investment securities trading (N25.4 billion).

Cash and cash equivalent

Cash and cash equivalents increased to N1.1 trillion from N960.8 billion.

This movement was driven by a 320.8 percent rise in net cash generated from operating activities, reaching N2 trillion compared to N477.5 billion.

Net cash used in investing activities recorded a negative cash flow of N1.9 trillion, while net cash used in financing activities amounted to N215.2 billion in H1’23.

Impairment charge

Impairment charges experienced significant growth, reaching N153.9 billion compared to N8.3 billion.

This brought the H1 annualized cost of risk to 7.7 percent, contrasting with 0.6 percent.

According to CSL, this increase in impairment charges can be partially attributed to the impact of devaluation on impairments related to FX loans.

Earning per share

UBA’s earnings per share saw substantial growth, rising to N10.95 per share from N1.98 per share.