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Q1 2022: UBA Plc Defies Headwinds, Records N42bn In Profit Growth

Kennedy Uzoka

May 01, (THEWILL) – Despite intense headwinds that impacted the economy this past quarter (Q1 2022), Africa’s Global Bank, United Bank for Africa (UBA) Plc, reported moderate, yet impressive performance, which signals a positive outlook for the entire year. In the bank’s Q1 2022 interim financial results released in the past week, the Tier-1 lender recorded positive performance in the key parameters that underscored resilience and unyielding efficiency in its corporate practice.

The interim financial results revealed a profit after tax (PAT) of N41.5 billion during the quarter against N38.2 billion recorded in the corresponding period of 2021, reflecting a moderate 8.7 percent growth. Profit before tax (PAT) was N44.5 billion compared with N40.6 billion which shows a 10 percent increase. Interest income rose by 15.2 percent to N125.0 billion from N108.6 billion in the corresponding period.

Notwithstanding the ample provision for Total Impairment charge of N4.1 billion (covering loans and receivables), which reflects a 106.4 percent increase from the N2  billion allowed in the Q1 2021, the bank posted Net operating income of N121.7 billion against N104.6 billion in the corresponding period – a 16.4 percent increase. Loans and advances to customers recorded a positive increase of 7 percent from N2.68 trillion in the preceding period to N2.86 trillion in Q1 2022. It suggests the bank’s addiction towards stimulating the economy through robust credit support to enterprises that operate mainly in the real sector.

A further insight showed that the bank’s Net income from fees and commission rose by 19.30 percent to N24.30 billion year-on-year against N20.36 billion in the preceding year.  In tandem with the growth trajectory that underlined the bank’s Q1 performance, the foremost lender generated a total of N14.96 billion in net trading and foreign exchange income; representing a 42.89 percent growth compared with N10.47 billion in the comparable period of 2021.

The bank’s commitment to efficient application of technology yielded good results. It raked in a total of N15.11 billion during the quarter reflecting 21 percent growth over N12.48 billion in the corresponding period. It had spent N14.9 billion on E-Banking expenses in Q1 2022 against N13.52 billion in Q1 2021 reflecting 10.1 percent increase. Total Interest income recorded a 15.2 percent increase to N125.07 billion from N108.59 billion in the corresponding period.

The efficient utilisation of its electronic banking channels to deliver superior financial services to its customers was also reflected in the 110 percent jump in Trade transactions income from N3.54 billion in Q1 2021 to N7.42 billion in the reporting period. Earnings per share rose to 114 kobo from 104 kobo in the corresponding period as Total assets which stood at N8.54 trillion in Q1 2021 rose by 4.06 percent to N8.88 trillion in Q1 2022.

The inflationary trend that aggravated in the first quarter reflected in the bank’s operating expenses, which rose to N46.32 billion from N38.29 billion in Q1 2022, showing a 4.06 percent rise, with ‘fuel, repairs and maintenance’ cost rising by 28 percent to N8.55 billion against N6.68 billion in Q1 2021. Training and human capital development gulped N905 million compared with 281million in 2021, a whopping 222.06 percent.

“The huge commitment to training and human capital shows the bank is not relenting in its human resource development goal which is central to attaining organizations’ vision and goals. The significant resources committed to human capital, e-banking and IT-related expenses by UBA in Q1 2022 rubbed off on the bank’s top and bottom lines. That is the way to go if it is determined to remain on top,” said Rosemary Akhimien, a human resource specialist.

Nigeria’s inflation rate rose by 15.70 percent in February 2022 after recording a fall in the previous month, January, at 16.87 percent as the nation faced fuel shortages that contributed majorly to push prices higher. The National Bureau of Statistics announced that the consumer price index (CPI) increase between February 2021 and February 2022 was 15.70 per cent, higher than 15.70 per cent recorded in January.

Nigeria has faced fuel shortages since February, after importing substandard fuel which resulted in weeks of severe scarcity and long queues at filling stations. The shortage has seen transport costs rise, thereby affecting goods and commodities nationwide. Inflation in March inched up to 15.9 percent from February’s 15.7 percent.  Many banks have reduced their working hours as a result of the high cost of diesel, the main source of energy used in running their operations.

The UBA’s Q1 2022 was precipitated by its 2021 FY results for the period ended December 31, 2021. The Tier-1 bank’s PBT rose 20.3 percent to N153.1 billion, compared to N127.3 billion at the end of the preceding year.  Similarly, profit after tax (PAT) grew by 8.7 percent to N118.7 billion in 2021, compared to N109.2 billion recorded in 2020. The bank had also explained that the impressive result was achieved amid huge challenging business and slow economic recovery in most of the countries of its (subsidiaries’) operations.

The lender’s gross earnings rose significantly to N660.2 billion, representing an increase of 7 percent compared to N616.8 billion recorded at the end of the 2020 financial year.  Total assets also followed the growth trajectory, hitting an unprecedented N8.5 trillion or 11 percent rise to the year under review, up from N7.7 trillion in 2020.

Commenting on the result, the Group Managing Director/CEO, Kennedy Uzoka, said that notwithstanding the tight and challenging operating environment, UBA continues to deliver significant performance, Uzoka explained that the quality of UBA’s portfolio, as well as the strength of the bank’s credit risk management frameworks and policies, remain the bedrock of the positive results that the bank has been recording over the years, adding that the year’s performance highlights UBA’s relentless customer focus, and leverage on its key strategic levers – People, Process and Technology.

“Looking forward, I am particularly excited about our ongoing Enterprise Transformation Programme, which is designed to enhance the bank’s process agility, service delivery and customer experience. We are also making sizable investments in cutting-edge technology and cyber security, to keep our innovative digital banking offerings above the curve, as we tool and re-tool our human resources to compete and win in a rapidly changing and evolving landscape. This will ensure the bank continues to achieve respectable top and bottom-line growth through the medium to long term,” the GMD stated.

The effect was the impressive Q1 2022 financial results.