By NIyi Jacobs
United Bank for Africa Plc has reported a mixed performance in the first quarter of 2026, as stronger revenue growth was overshadowed by rising credit losses and increasing operating expenses.
The results reflect lingering challenges from the bank’s 2025 financial year, with pressure on profitability continuing into the new period. A key factor was a sharp increase in impairment charges, driven by ongoing efforts to clean up the bank’s loan book following the end of regulatory loan forbearance by the Central Bank of Nigeria.
With the removal of regulatory flexibility that previously allowed banks to delay recognition of non-performing loans, the full impact of credit weaknesses is now being reflected in earnings.
Despite these headwinds, UBA recorded growth in top-line performance. Gross earnings rose 4.9% year-on-year to ₦801.5 billion, supported by a 6.9% increase in interest income and a 17.3% rise in non-interest revenue, which reached ₦137.1 billion. The gains were driven by expanded lending activity and stronger fee-based income streams.
Net interest income also improved, rising 10.5% to ₦383.7 billion, aided by controlled funding costs. However, profitability per asset weakened slightly, with net interest margin declining to 6.5%, indicating pressure on asset yields compared to previous periods.
On the downside, impairment charges surged 190.9% to ₦41.2 billion, reflecting higher credit risk provisions. Although the cost of risk improved to 2.0% relative to loan volume, it remained above the industry benchmark of 1.8%, suggesting lingering efficiency gaps in risk management.
Operating expenses also climbed significantly, rising 29.8% to ₦319 billion. This pushed the cost-to-income ratio to 61.2%, as revenue growth was not sufficient to offset rising overheads.
As a result, profit after tax declined by 22.8% to ₦146.6 billion. Earnings per share dropped even more sharply—by 40.2%—largely due to share dilution following the bank’s 2025 capital raise.
Key performance indicators also softened, with return on average assets (ROAA) falling to 1.11% and return on average equity (ROAE) declining to 8.44%.
Analysts say UBA now faces a critical period in 2026, where restoring profitability will depend on tighter credit controls, improved operational efficiency, and stronger returns from its asset base.
Without a sustained rebound in returns, market valuation recovery may remain constrained despite the bank’s strong revenue base and pan-African footprint
