By Niyi Jacobs
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In Nigeria, United Bank for Africa (UBA), a Tier 1 bank, reported a substantial increase in nine-month operating results for 2024, bolstered by a 170% rise in interest income, climbing from N666.3 billion in 9M 2023 to N1.8 trillion in 9M 2024.
This growth came despite inflationary pressures, an unstable naira, and challenging economic conditions, with Nigeria’s headline inflation averaging 32.77% and the naira depreciating to N1,541.94/USD by September 2024.
UBA attributed the rise in interest income to its credit expansion across various sectors: a 335.5% increase in lending to banks, a 136.6% increase in consumer credit, and a 123% growth in loans to corporates. Despite reduced non-interest income and a 211.6% jump in interest expenses, UBA’s gross earnings surged by 83.3% year-over-year to N2.4 trillion in 9M 2024.
Key Financial Highlights:
Gross Earnings: N2.4 trillion, +83.3% YoY
Interest Income: N1.8 trillion, +170% YoY
Non-Interest Income: N435.8 billion, down 24.1% YoY
Profit Before Tax: N603.5 billion, +20.2% YoY
Profit After Tax: N525.3 billion, +16.9% YoY
Total Assets: N31.8 trillion, +95.9% YoY
Customer Deposits: N27.1 trillion, +97.5% YoY
Loans & Advances: N7.8 trillion, +53.7% YoY
Shareholders’ Fund: N3.59 trillion, +101.6% YoY
Strong Asset Growth, Dividend Payout Amid Capital Requirements UBA’s total assets nearly doubled, reaching N31.8 trillion, supported by a 125.5% rise in cash and balances, a 1,238.6% jump in financial assets, and a significant increase in investment securities and loans. Customer deposits also saw a 97.5% growth, hitting N27.1 trillion, while shareholders’ equity rose by 101.6% to N3.59 trillion.
Amidst this growth, UBA’s board approved an interim dividend of N2 per 50 kobo share, reflecting the bank’s commitment to shareholder value. The appointment of Mr. Chukwuma Nweke as Managing Director, effective October 1, 2024, marks a leadership shift aimed at further bolstering operational efficiency.
However, UBA faces a capital gap under new regulatory requirements: with Tier 1 capital at N115 billion, the bank must raise N385 billion to meet the Central Bank of Nigeria’s (CBN) minimum requirement of N500 billion for banks with international licenses. UBA has not yet disclosed a recapitalization strategy.
Market Outlook:
Despite a decline in foreign exchange gains and rising operating costs, UBA’s robust financial position highlights resilience in a volatile economy. The bank’s focus on diversified lending, coupled with strategic asset growth, positions it favorably to navigate upcoming regulatory hurdles and maintain profitability in the challenging Nigerian financial landscape.
