United Capital, an investment company in Nigeria, has recorded a 35 percent increase in its investment income for the first nine months of 2023, largely on interest rate hikes.
BusinessDay findings from the company’s financial statement showed its investment income rose to N8.9 billion in the first nine months of this year from N6.61 billion in the corresponding period of 2022.
The rise in interest rates was evident in the N12.8 billion increase in interest from placements and bonds. This represented a substantial 217.8 percent rise from the N4.04 billion recorded in the same period of the previous year.
The Central Bank of Nigeria commenced a series of hikes in its benchmark interest rate also known as Monetary Policy Rate in May 2022, raising it from 11.5 percent to 18.75 percent in July 2023.
Further findings from the statement showed the firm’s pre-tax profit rose by N9.7 billion from N9.1 billion, while profit for the period increased to N8.5 billion from N7.7 billion.
Other operating expenses were up by 75.5 percent as the cost of doing business rocketed in the face of Nigeria’s inflation, which surpassed an 18-year high in October.
United Capital’s total comprehensive income for the period soared to N37.2 billion, driven by N28.8 billion in other comprehensive income from fair value gains on equity and debt instruments.
Although fees and commission income decreased to N5.74 billion, attributed to a decline in financial advisory fees, the company maintains a robust position with over N820 billion in assets under management.
Foreign exchange gains amounted to N1.18 billion in the period under review from N708 million. Net cash generated by/(used in) operating activities amounted to N61.36 billion, Net cash generated by/(used in) investing activities amounted to N21.82 billion, Net cash used in financing activities amounted to N6.61 billion.
Cash and cash equivalents at end of period amounted to N240.13 billion.
The company provides investment banking, financial advisory, trusteeship, fund management and issuing house services among a cocktail of offerings. This year, It ventured into consumer finance after obtaining a permit from the CBN to set up a microfinance unit. It has forged a strategic alliance with two leading Swiss investment banks to extend its operations to Europe.