Navigating Nigeria’s operating environment requires homegrown tactics in pursuit of global strategies. That is because the local environment can be tricky and laden with booby traps. The management of the United Bank for Africa seems fully aware of this, given the jump in bottom-line strewn from its local and global operations.
That is exactly what the bank’s full-year report as of December 2019 seems to suggest as its gross earnings jumped 13 percent to N559.8 billion from 494 billion. This was achieved with a combination of its high yielding earning assets and fee and commission business. Net Interest Income was up 11.6 percent to N404.8 billion from N362.6 billion, to attest to the bank’s reputation as a solid player in the maturity transformation business.
Kennedy Uzoka, Group Manning Director/CEO, puts it all down to a grand strategy around service to customers. “Gross earnings crossed the N500 billion threshold to N559billion, whilst total assets also crossed the N5 trillion mark for the first time to N5.6trillion. Our strategy remains centered around unparalleled service to our esteemed customers,” he said.
Looming large in UBA’s portfolio of interest-bearing assets is its loan book that ballooned at 20 percent to NN5.6 trillion from N4.9 trillion. But deposits were almost as quick-paced, jumping 14.4 percent to N3.83 trillion from N3.35 trillion. With Loan growth and deposits base running toe-to-toe, the bank’s loan deposits ratio rose to 53.7 from 51.2, exposing the bank to higher credit risk even if more loans mean better funding for businesses that includes SME’s, a veritable tool for building a virile economy as did the Chines more than three decades ago.
Other than earnings from interest-bearing assets, the bank gleaned big from fees and commissions, pushing it up 17.8 percent to N110.6 billion from N94 billion. This helped to buoy the bank’s pretax position by 4.2 percent to N111.3 billion from N106.8 billion. Because the percentage rise in pretax profit was marginal, it had a gnawing effect on pretax profit margin which deflated to 19.9 percent from 21.6 percent.
The bank’s bottom line reacted to the growth of pretax profit with a 13.3 percent improvement to N89.1 billion from N78.6 billion but it left net profit margin unchanged at 15.1 percent. This means the bank may have to work on wringing out more profit from future earnings as the net profit margin speaks to a bank’s ability to prune costs that emanate after pretax profit, mainly financial costs.
But the market seems a bit hesitant to load on the bank’s stocks as it lost value at the end of last Friday’s trading with the UBA stock shaving off 0.2 percent in value, closing at N6.9 from an opening price of N7.15, extending a dive which commenced on March 2. With a market capitalisation of N235.97 trillion, the stock had traded at a high of N9.25 in the last 52-week and a loss of N5.40 in the same time frame.
But the planned investments by the bank may reverse investors view of the bank going forward because as Uzoka, said, “In 2020, we will pursue aggressive deepening of market share in all our subsidiaries, leveraging technology, rich human resources and our customer-first strategy to win in all the markets we operate, notwithstanding the challenges of our operating environment.”
Proud of his achievements he said, “I am indeed excited about the synergy we have built within the UBA Group and the significant progress we have made in our transformation drive. We have positioned the bank as a truly pan-African banking franchise, leveraging our operations in France, the UK and the USA, to deepen intra-African trade, and facilitate capital flows between Africa and the rest of the world.
