UBA African operations sustain growth momentum

Investment made by UBA in its African subsidiaries is paying off as growth and profits from ex-Nigerian operations rapidly gain momentum.

The African subsidiaries of Nigeria-based United Bank for Africa Plc (UBA) have buoyed the bank’s earnings and financial status for the financial year ended 31 December 2016.

Analysis of the lender’s 2016 annual report and accounts shows that the subsidiaries, located outside Nigeria, in 18 countries across the continent, accounted for 34 per cent of UBAs profit for the year.

The subsidiaries’ contribution to revenue, pre-tax profit, and total assets for the year was 32 per cent, 35 per cent, and 33 per cent, as they continue to justify UBA’s conviction that it will unlock latent value for shareholders with its venture into the continent.

The contribution of the African subsidiaries to earnings has risen from only seven per cent in 2012, to 34 per cent in 2016.

The impact of the subsidiaries on profit before tax jumped from 10 per cent in 2012 to 20 per cent in 2013, and 35 per cent in 2016 as their total assets rose to over N1 trillion as at year end.

In addition, interest income from the bank’s African subsidiaries which stood at N125 billion in 2012, rose to N171 billion in 2016, comprising 34 per cent of total interest income.

Tony O. Elumelu, Chairman of the Board of the bank, said that UBA’s commitment to African growth has been pervasive, impacting various sectors.

“Across Africa, the bank has won and executed important mandates, which demonstrate our ability and commitment to finance growth across our continent,” Elumelu said in his address to the bank’s shareholders on the performance for the 2016 financial year.

Data from Bloomberg, the New York-based software, data, and Media Company, shows that as at Wednesday, 17 May 2017, UBA stock posted a return in excess of 88 per cent for the past one year.

It also outperformed the broad market, gaining 45.78 per cent year to date, compared to a 3.73 per cent gain by the Nigerian Stock Exchange (NSE) all share index for the same period.

UBA was priced at N6.56/ share as at the close of Business yesterday and is the second best performing bank stock this year.

In a period when the local currency, the naira had weakened considerably against other currencies, the bank’s performance was boosted by foreign currency translation of the transactions from the various subsidiaries.

The bank’s 2016 audited annual report and accounts said, “Partly driven by the weakness of Nigerian Naira relative to other African currencies, the African subsidiaries ex- Nigeria (UBA Africa) doubled interest income and grew non-interest income by 17%.

“Overall, UBA Africa grew gross earnings by 69%, contributing 30% of the Group’s top-line, from 21% in 2015 financial year. Interestingly, we had over 50% growth in dividends from subsidiaries, reflecting the stronger performance from the foreign operations and impact of Naira devaluation on FCY dividend income.”

Lagos-based CSL Stockbrokers Limited, said in a recent banking update made available to BusinessDay, that it has a ‘Buy’ rating for UBA.

UBA is presently one of Africa’s leading financial institutions offering universal banking to about 14 million customers across over 1,000 branches as it strives to build a strong domestic and African brand. It is also well established in three global financial centres: New York, London, and Paris.

 

INNOCENT UNAH