When UBA wrenched-up customer deposit by nearly half in the last financial year to N5.7 trillion from N3.8 trillion, the natural question pundits asked was, “how did they do it in a depressed economy with rising inflation”? Economic units from government to businesses and households would prefer to hoard cash; that is if they can manage to earn it. Yet they trusted UBA enough to keep their hard earned cash.
The bank attributes the feat to first rate innovative products and a dedication customer satisfaction, saying it invested significantly in cutting edge technology in a bid to boost its overall services to customers. Referring to Leo, its chatbot and personal assistant launched in 2018, the bank boasts of charting that innovative space after introducing it on facebook and whatsApp.
Despite the leap in deposits, the bank was careful to watch its loan deposit ratio as to apply a prudent credit policy that saw its loan deposit ratio drop to 45 percent from 54 percent. That is what to expect from a financial institution that recognized that the economy was in a trough and a reckless credit policy would get it in troubled waters. But now that the economy has successfully navigated the recession, it is hoped that the ratio would rise going forward.
Even though the bank lowered borrowing in the period, its interest bearing assets saw positive growth as interest income rose 5.7 percent to N428 billion from N404.8 billion. Given this positive movement, net interest income climbed 17 percent to N259.47 billion from N221.87 billion to indicate the good quality of the interest bearing assets that the bank invested in, this is despite “the persistent low interest rate environment in 2020”.
The bank’s topline and bottom line profits were positively impacted by the efficiency in asset allocation. They were also impacted by its Innovation in customer service through friendly and intuitive technology. That is why despite a global pandemic and a recession at home, the bank grossed N620.4 billion, which is 10 percent more than the N559.8 achieved in a year of less economic turmoil.
Piggy backing on the upward trajectory of revenues, the bank’s profit before tax rose to N131.9 billion compared with N111.3 billion in 2019; similarly, profit after tax rose by 27.7 percent to N113.8 billion compared with N89.1 billion in 2019 and earnings per share thus rose by 26.8 percent from N2.52 in 2019 to N3.20 in 2020.
A further breakdown showed that the bank’s total assets last year leapt to N7.70 trillion from N5.62 trillion in 2019, about 37 percent increase. The balance sheet performance is reflective of the overall performance outlook for the pan-African banking group. Market pundits are placing a “buy” note on UBA on the heels of the 2020 performance. UBA has the highest upside potential among the five stocks recommended by Cowry Asset Management Limited as the stock market reopened.
If anything, it demonstrates management’s ability to navigate a crisis. This shouldn’t be surprising as the current Group Managing Director who doubles as CEO was at the thick of steering the bank to safe waters during the earlier recession in 2016 that bled the industry. That was a steep learning curve to the then freshly minted CEO.
He assured that as a global bank, UBA remains well capitalised and determined to successfully drive financial inclusion on the continent through innovative products and vast network.
He pointed out that the bank’s capital adequacy and liquidity ratios, which came in at 22.4 percent and 44.3 percent respectively, were well above the regulatory minimum of 15.0 percent and 30 percent.
“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,” Uzoka said.