• Tuesday, May 28, 2024
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BusinessDay

UBA: Re-engineering for unprecedented profitability

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When United Bank for Africa (UBA) plc approached the Nigerian Stock Exchange (NSE) last week with its full year 2012 financials, and early this week with its first-quarter (Q1’2013) results, the bank’s feats as exemplified by the two results caused analysts to believe that the bank now looks set for industry leadership; has been re-engineered for unprecedented level of profitability; has a clean and robust balance sheet; results showed a cost-efficient institution, and now a bank with the required ratios.

Considering this position, shortly after examining the Q1’2013 financials, which came on the heels of its impressive FY 2012 financials, analysts at FBN Capital resorted to rate UBA shares ‘outperform,’ noting also that their consensus estimates for 2013 was likely to be revised up. The bank’s share price opened this week at N8.25 kobo. “Year-to-date, UBA shares have gained 93 percent (NSE All Share Index: 28%), over and above the 79.5 percent returned in 2012. Our estimates are under review. We rate UBA shares ‘outperform,’” said FBN Capital analysts.

The FY 2012 financials

The FY 2012 financial highlights of the bank shows that profit before tax was N52.01 billion, compared with a loss of N26.60 billion in 2011 (an increase of 295.53%); profit for the year was N54.77 billion, compared with a loss of N6.80 billion (an increase of 905.44%); total comprehensive income attributable to equity holders was N55.53 billion, compared with a loss of N1.12 billion (an increase of 5,058.04%).

Also, the bank’s audited statement of financial position for FY 2012 compared with FY 2011 showed that its total asset was N2.273 trillion, compared with N1.920 trillion (an increase of 18.39%); total liabilities was N2.080 trillion, compared with N1.769 trillion (an increase of 17.58%); total equity was N192.47 billion, compared with N150.94 billion (an increase of 27.51%).

Comparing FY 2012 with FY 2011, the bank recorded 34.45 percent increase in gross earnings, representing approximately N56.40 billion additional revenue. The bank was able to keep its total operating expense lower by 3.31 percent in FY 2012 compared to FY 2011. Non-interest income improved by 21.1 percent from N50.8 billion in FY 2011 to N61.5 billion in FY 2012, a development linked to the increasing acceptance of the bank’s unique fee based products and services which it has successfully deployed across our franchise in Africa.

“The fourth quarter earnings contributed to a strong year for UBA,” said Phillips Oduoza, group managing director/CEO, UBA.

“UBA had a good performance for full year 2012. This performance puts us in a position to commence our journey back to industry leadership, thereby, setting the stage for the attainment of our long-term strategic intent of being a leading bank on the African continent. UBA has continued to focus on customer service delivery, efficient capital management and returns maximisation with return on equity exceeding 30 per cent in 2012. We believe that our ability to serve clients globally with solutions tailored to their needs gives us a strong advantage in today’s rapidly changing and highly competitive market place. Adopting a unique business platform across Africa, as a group, has also ensured that we present a single face to our customers and clients around Africa. This does not only help foster collaboration throughout the Group, it also strengthens our ability to deliver value adding and innovative solutions to our customers and clients through our integrated model.

“UBA’s gross earnings for the year were more than N220 billion, with all our businesses contributing to gross earnings growth. We achieved those results despite a tough operating environment, demonstrating the strength and resilience of our business model.

“UBA had a strong year in 2012. Our success was again driven by the strength of our customer-focused, Corporate and Treasury driven business model. We are confident about our ability to deliver sustainable earnings growth in the future. We will continue to strategically invest in our businesses, manage our expenses and contain cost growth, whilst continually seeking ways to exceed expectations.

“As always, our employees and their dedication to our customers and clients remains the driving force behind our success and I thank them for their tremendous contributions,” Oduoza said.

First-quarter 2013 results

This past Monday, the bank announced its unaudited financial results for the first quarter (Q1’2013) ended March 2013. A profit of N17.2 billion was achieved, representing an increase of 12.4 percent over the N15.3 billion achieved in the corresponding period.

The bank’s Q1 2013 financial highlights show that profit before tax was N17.2 billion, compared with N15.3 billion (an increase of 12.4%); profit after tax was N15.6 billion, compared with N13.1 billion (an increase of 19.1%); total comprehensive income attributable to equity holders was N16.3 billion, compared with N12.3 billion (an increase of 32.5%).