United Capital Profit Jumps 77% Despite Shrinking Asset Base, Higher Costs

United Capital Plc delivered a strong financial performance in the first half of 2026, posting a 77 per cent increase in profit after tax on the back of robust trading income, higher investment returns and growing fee-based earnings, even as its balance sheet shrank and operating costs climbed.

The investment banking and financial services group reported profit after tax of N21.10 billion for the six months ended June 30, 2026, up from N11.89 billion in the corresponding period of 2025.

Profit before tax also surged 80 per cent to N24.78 billion from N13.79 billion, while gross earnings rose 58 per cent to N37.49 billion.

The strong earnings performance was driven by broad-based growth across the group’s core businesses.

Net investment income increased to N13.81 billion from N9.55 billion, while fee and commission income climbed to N14.28 billion from N11.35 billion.

Net trading income recorded one of the strongest performances during the period, jumping to N4.96 billion from N419.4 million a year earlier.

Another boost came from improved credit quality, with the group recording an impairment write-back of N362.1 million, compared with an impairment charge of N508 million in the first half of last year. Earnings per share also improved significantly to 234 kobo, from 132 kobo.

However, the impressive earnings masked a contraction in the group’s balance sheet.

Total assets declined to N1.64 trillion at the end of June from N1.76 trillion at the close of 2025, largely reflecting a reduction in investment securities, which fell to N1.08 trillion from N1.34 trillion. Borrowed funds also dropped sharply to N185.88 billion from N372.30 billion, suggesting the group reduced its leverage during the period.

While lower borrowings are generally viewed as positive because they reduce financing costs and strengthen the balance sheet, the reduction also contributed to the decline in total assets.

The report also showed rising operating costs as inflationary pressures continued to weigh on businesses.

Personnel expenses increased to N4.02 billion from N3.11 billion, while other operating expenses rose to N9.81 billion from N7.18 billion. Depreciation charges more than tripled to N552.8 million, reflecting increased investments in property and equipment.

Despite the higher expenses, revenue growth significantly outpaced cost increases, enabling the company to expand profitability.

The group also recorded a reversal in other income, reporting a loss of N222.9 million compared with other income of N431.4 million in the corresponding period last year. Income tax expense also increased to N3.68 billion, almost double the N1.91 billion recorded in the first half of 2025, reflecting stronger profitability.

On the balance sheet, shareholders’ funds strengthened considerably, rising to N187.09 billion from N150.00 billion, supported by higher retained earnings and fair value reserves. Cash and cash equivalents also increased substantially to N400.80 billion, compared with N287.10 billion at the end of last year, providing the group with stronger liquidity.

Overall, the results underscore United Capital’s ability to sustain earnings growth despite a more conservative balance sheet and rising operating costs.

While investors are likely to welcome the sharp increase in profitability and stronger liquidity position, analysts may closely watch the decline in total assets and investment portfolio to assess whether the repositioning supports long-term growth or signals a more cautious operating strategy in the months ahead.