BusinessUBA Sustains Earnings Uptrend in HY 2022

UBA Sustains Earnings Uptrend in HY 2022

…As Interest Income Grows By 15.6%

Africa’s Global Bank, United Bank for Africa Plc, maintained its growth trajectory in the 2022 half year operations with impressive performance recorded in the financial parameters. The Tier-1 bank’s audited half year report published last week showed that it posted a 15.6 percent growth in interest income which jumped from N222.35 billion in HY 2021 to N257.36 in the review period as investment securities in treasury bills, bonds and others rose.

“It is an indication of active involvement in real banking operations suggesting that the bank if committed to meeting the regulatory 65 percent Loan Deposit Ratio (LDR) requirement prescribed by the Central Bank of Nigeria (CBN)”, said Dan Asimobi, a finance analyst.

Similarly, fees and commission income increased by 30.2 percent from N74 billion to N96.36 billion with electronic banking income which rose by 22.8 percent to N36.32 billion from N29.6 billion in the corresponding period as a major driver.

Oliver Akawuba Ubauba

Electronic banking income represents income taken on transactions processed via electronic channels such as ATM, POS, mobile banking as well as credit and debit card transactions while Trade transactions income entails one-off charges as related to letter of credits and other trade businesses which are excluded from those included in determining effective interest rates on those carried at amortized cost.

Amid increasing inflation rate and other headwinds which the economy continues to battle, the bank grew profit after tax by 16 percent, year-on-year, to N70.33 billion from N60.58 billion in HY 2021. Nigeria’s inflation rate in the month of July 2022 rose to a 17-year high of 19.64% compared to 18.6% recorded in the previous month of June 2022, according to the National Bureau of Statistics (NBS).

Total assets increased from N8.54 trillion in H1 2021 to N9 trillion in H1 2022, suggesting that the bank heads towards a N10 trillion assets mark in FY 2022 after crossing the N8 trillion mark in FY 2021. Basic and diluted earnings per share also witnessed an upward trend — up from N1.69 in HY 2021 to N1.98 in HY 2022.

Operating expenses jumped to N96.56 billion from N78.75 billion in the contrast period, representing a 22.61 percent. This was driven mainly by rising cost of fuel, repair and maintenance which jumped from N13.42 billion to N16.7 billion or 24.7 percent.

The bank recorded a penalty of N524 million as against N278 million representing N88.5 percent rise, raising fears that the financial institution may use a significant portion of the shareholders’ fund to settle the penalties for regulatory infraction at a time investors hope for a better dividend.

The employee benefit expenses rose to reach N52.3 billion in H1 2022 from N42.6 billion in H1 2021 as the group noted that it continues to invest in staff training. It stated, “The Bank encourages participation of its employees in arriving at decisions in respect of matters affecting their well-being. To this end, the Bank provides formal and informal opportunities where employees deliberate on issues affecting the Bank and employees’ interest, with a view to making inputs to decision thereon.

“The Bank places a premium on the development of its manpower. In addition to the routine online Executive Chat, wherein employees interact with the Management to discuss issues of customer and employee satisfaction, the GMD/CEO operates an open-door policy and encourages employees to channel suggestions and complaints to him as may be required,” the foremost old generation financial institution stated.

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