UBA nets N132bn profit in 2020
The board of the United Bank for Africa Plc, on Monday presented its audited financials for the full-year ended December 31, 2020, showing that gross earnings grew by 10.8% to N620.4bn, compared to N559.8bn in the corresponding period of 2019.
Profit growth was way better, with profit before tax was of N131.9bn, compared to N111.3bn at the end of 2019, while Profit After Tax improved by 27.7% to N113.8bn, compared to N89.1bn recorded at the end of the preceding year.
Despite the challenges posed by the outbreak of the Coronavirus pandemic, the bank’s total assets also grew by 37% to N7.7tr for the year under review, with customer loans growing by 24% to N2.6tr, whilst customer deposits increased by 48.1% to N5.7tr, compared to N3.8tr recorded in the corresponding period of 2019.
The directors have proposed a final dividend of N0.35 per share of 50 kobo, bringing total dividend for the year to N0.52, as the bank had paid an interim dividend of N0.17 in the year. Payment of th dividend is however subject to shareholders’ approval at the next annual general meeting.
A statement by the group quoted the Group Managing Director/Chef Executive, Kennedy Uzoka, as saying that the year 2020 was a very challenging one, despite which UBA “recorded double-digit growth in both our top and bottom lines, as gross earnings and after-tax profit grew by 10.8% and 27.7% to N620.4billion and N113.8 billon respectively.
“Return on equity was 17.2%, even as our cost-to-income ratio moderated to 61.3%. Our earnings per share of N3.20 is a 26.8% growth from the preceding year, as we continue to ensure maximum value creation for our highly esteemed shareholders.”
“Despite the tumultuous impact of Covid-19 pandemic globally and across our 23 countries of operation, we created N519bn additional loans as we continued to support our customers and their businesses. Customer deposits grew 48.1% to N5.7tr, driven primarily by additional N1.8 trillion in retail deposits. As a global bank, we remain well capitalized and determined to successfully drive financial inclusion on the continent through our innovative products and vast network. Our capital adequacy and liquidity ratios came in at 22.4% and 44.3%, well above the respective regulatory minimum of 15.0% and 30%.
On the outlook for the group, he assured that “our primary strategy will continue to focus on providing excellent services from our customers’ standpoint, putting the customer first always. Looking ahead, I am inspired by the achievements we have made since the launch of our transformation programme. We have expanded market share considerably across the geographies where we operate and are consolidating our digital banking leadership in Africa. We will continue to leverage our diversified business model and dedicated workforce to further strengthen our position as ‘Africa’s Global Bank. ”
Speaking on the performance, the Group Chief Financial Officer, Ugo Nwaghodoh noted the impact of the “persistent low interest rate environment in 2020 exerted significant downward pressure on margins.
“Notwithstanding, our interest income for the year grew by 5.7% (to N427.9 billion), driven by 8.2% and 7.5% year-on-year growth on interest income on loans and investment securities respectively. Our interest expense declined by 8% (to N168.4billion) driven largely by a 34.2% decline in interest expense on customer deposits in our Nigerian operations, bringing down the Group’s cost of funds to 2.9%, from 4% in 2019.”
Continuing, Nwaghodoh said th group had “prudently stepped-up our reserves for loan impairments, hence the 37.4% YoY growth to N22.4billion, implying a 0.9% cost of risk. These reserves provide adequate cover for impairments and should help minimise the need for further reserves in the current year, in view of the improving global operating environment. Our NPL ratio has declined to 4.7% (from 5.3% in 2019), driven by growth in the loan book, robust credit risk monitoring architecture, and payment of Past Due Obligations (PDOs).”
The CFO added that as Nigeria continues to see signs of recovery from the Covid-19 pandemic led by resumption of economic activities across the globe, increase in consumer spending, and continued progress on vaccine deployment, UBA is well- positioned for greater synergy across the group.
“We remain committed to our prudent risk management practices and optimistic of best value for our stakeholders in the days ahead,” he added.