UBA PLC READY FOR FINANCIAL CRISIS

From the nine months figures to September released this week. United Bank For Africa (UBA) is quite ready for the storm that seems to be gathering over Nigeria's financial system presently.

According to the figures, as expected by September UBA's provision for bad debts more than doubled (grew by 147.1%) to N9098m within the nine months but the only cause for alarm is that its loan portfolio thus needs closer watch.

Other wise, no cause for alarm principally because UBA seems in good control of its major costs; recorded fair growth in traditional incomes and more importantly is reaping bountifully from foreign exchange transactions and fair value of its financial assets.

By September gross earnings was up 8.16% to N265527m more because net trading income rose by 22.7% to N24398m and fee income increased by 18.6% to N56215m.

At 4.51% to N182989m, growth in interest income was far less impressive but acquired more significance when it is noted that accompanying interest expense dropped by 2.82% to N70916m.

In the end. Interest income contribution to the bottom line was more impressive than fee and commission growth because the accompanying fee and commission expense was 66.7% up to N11347m.

Both were far better than the impact of 38.7% drop to N1925m in other operating income.

Equally helpful was the less than gross earnings growth recorded in staff costs by 6.68% to N46609m and almost at par growth in other operating expenses by 8.43% to N59598m.

In the end, UBA reported 7.3% increase in profit before tax to N61555m in spite of the far higher impairment provision.

However, shareholders may even have much more to expect dividend from come year end and all things being equal.

This is because not included in gross earnings computation this far was great leap in foreign exchange transactions difference to N47291m from N493m previously and in fair value gain on financial assets to N21520m from N6522m by September 2015.

Add all these, cumulative profit for the nine months comes to N121106m up 114.9% on N56367m previously. Of course, a part of this will be paper profit.

UBA PLC:  Nm Nine months
                       2016.            2015
Gross inc.    265527.      245492
Interest inc. 182989.      175090
" expense.     70916.       72975
Commission 56215.       47385
" expense.     11347.         6807
Net trading.   24398.       19880
Other op. Inc.  1925.         3137
Impairment     9098.         3682
Staff costs.   46609.        43691
Other op. Exp 59598.      54966
Profit b4 tax   61555.      56366
FX gain.          47291.          493
Fair value.      21520.       6522
Cum. Profit.  121106.     57366

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