…As Total Assets Cross N8trn Mark
March 13, (THEWILL) – Subsidiaries of the United Bank for Africa (UBA) Plc – the offshore operating segments of Africa’s Global Bank – collectively generated over N1trillion Revenue in five years (2017-2021), data from the bank’s annual reports have shown. The result which reflected a continued trend in the upward performance trajectory, revealed that the bank hauled N976.63 billion revenue in its African operating segments, except Nigeria, while N88.32 billion was earned from offshore locations in the rest of the world. This brings the subsidiaries’ total revenue haul to N1.1 trillion in the 5-year period.
Cumulatively, the subsidiaries’ component accounts for 38.8 percent of the lender’s overall N2.8 trillion revenue for the review period. Further analysis of the data gleaned from the annual reports of the financial services firm showed that the subsidiaries’ total revenue rose from N163.35 billion in 2017 to N300 billion in 2021, reflecting a 55 percent growth.
Specifically, in 2017, the subsidiaries recorded a total revenue of N163.34 billion which rose to N166.15 billion or 1.73 percent in 2018; it climbed further to N184 billion reflecting a 10.74 percent rise in 2019. Notwithstanding the COVID-19 challenges, the subsidiaries’ total revenue grew 36.85 percent to N251.8 billion in 2020 against the N184 billion of 2019. For the 2021 financial year, the segments pooled a total revenue of N300 billion which represents a 20 percent jump from what was achieved in the preceding year.
On the Profit side, the subsidiaries’ total Profit Before Tax (PBT) which recorded a mere N54 billion in 2017, shot up to N105.4 billion in 2021, representing 95 percent growth. Trending on the same growth trajectory, total Profit After Tax (PAT) for 2021 was N75.35 billion as against N40 billion in 2017 reflecting a growth of 88.25 percent. Furthermore, the total PAT of N266.5 billion generated by the subsidiaries during the 5-year period was 54.34 percent of total N473 billion for the period.
The bank’s Loans and Advances, a critical component of the balance sheet, recorded a tremendous growth both in 2021 FY and the 5-year review period. For the first time, the lender’s Total Assets crossed the 8 trillion mark to hit N8.54 trillion in 2021 against N7.7 trillion in the preceding year, representing 11 percent increase. For the 5-year period, UBA’s Total Assets rose from N4.1 trillion in 2017 to N8.54 trillion in 2021 – a significant growth of 108.3 percent.
Explaining the significance of strong asset base, Professor of Finance and Accounts at the Nasarawa State University, Keffi, Muhammad Mainoma, said it reflects the firm’s ability to act strategically. According to Mainoma, business managers will continue to study the environment and take advantage to invest in areas that thrive.
“For a bank, there is no period that people will not need money. So, once a business is focused and invests in areas that people always need, you will not lose at all. This explains the continuous growth despite difficult circumstances for the past five years,” the immediate past President, Association of National Accountants of Nigeria (ANAN), told THEWILL in a note.
Commenting on which factor contributed more to the impressive performance of the subsidiaries – quality of the bank’s corporate governance, or the operating environment, Mr Sam Ndata, Chief Dealer/COO at Hedge Securities and Investment Co. Ltd, attributed the results more to the overall corporate governance which cascades through its hierarchy.
“If the subsidiaries are doing well, it means that their parent company is really doing well because the child enjoys the good things coming from the parents,” the Doyen of the Stockbrokers added in a philosophical note.
UBA had announced an impressive performance in key financial parameters of its 2021 full year report for the period ended December 31, 2021. The Tier-1 bank said in its audited results submitted to the Nigerian Exchange that its profit before tax (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.
This marks the first time the bank’s assets will cross the N8 trillion mark indicating sound management decisions in resource management and aggressive pursuit of customer deposit.
The report showed that net loans grew by 7.7 percent growth to N2.8 trillion, whilst customer deposits rose by 12.2 percent to N6.4 trillion, compared to N5.7 trillion in the corresponding period of 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,
He said, “The year 2021 can best be described as a year of global recovery; economies around the world began to witness early-stage recoveries, as supply chains recover from the devastating disruptions suffered in 2020.”
“Consequently, UBA recorded a remarkable 7% growth in top line to N660 billion (USD1.56bn), and profit before tax (PBT) of N153.1 billion, up 20.3% from the prior year. Net Loans and advances grew by 7.7% to N2.8 trillion with exposure mostly to resilient economic sectors including oil & gas, agriculture and manufacturing. Deposit from customers grew 12.2%, crossing the N6 trillion mark, to N6.4trillion.”
The GMD 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 current 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 Program which is designed to enhance the bank’s process agility, service delivery and customer experience. We are also making sizeable 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.
UBA’s Group Chief Financial Official, Ugo Nwaghodoh, who corroborated the GMD’s comments, said, once again, the bank has shown resilience. It achieved sizeable growth and strengthened its balance sheet despite the slow pace of economic recovery that characterised the year 2021.
Through active and diligent assets and liabilities management, the bank was able to protect its net interest margin and achieved a downward moderation of Cost of Funds (CoF) by 70 basis points to 2.2 per cent from 2.9 per cent in the prior year.
According to him, the group’s capital adequacy ratio at 24.9 per cent was well above the required regulatory minimum and reflects a strong capacity for business growth. “The Group’s non-performing loan ratio improved further to 3.6 per cent from 4.7 per cent at the end of 2020. This testifies to the quality of UBA’s loan portfolio even as the bank remains relentless in its resolve to drive down the Cost-to-Income ratio, which stood at 63.0 per cent at the end of the year.”
Nwaghodoh added that the bank achieved further strides in growing its business and gaining market share across its pan-African operations, with the region accounting for 63.2 per cent of the Group’s profitability, compared to 55.4 per cent in 2020; Loans and advances as well as Deposit in the region were also up 14.5 per cent and 27.3 per cent, respectively from a year earlier.
UBA has a large footprint across the globe, operating in 20 African countries, with banking operations in both the UK and the US. It maintains a representative office in Paris, France, and has been granted a licence to operate in Dubai, United Area Emirate.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
