HOW UBA SURVIVED 2018 ON THREE LEGS

The year 2018 would have been a rather bad financial year for United Bank for Africa Plc otherwise known as UBA but for three legs on which it stood through the year.

The first and major was a lucky break. In 2017, apparently UBA provided so much as required by the CBN for non performing loans especially and other doubtful assets. Come 2018, some of these performed and UBA found itself reversing into its profit and Loss statement N36.991bn over provision from loans and another N3.162bn from some assets provision.

Both come to about 40% of the N106.766bn UBA reported as profit before tax at the end of December 2018. Imagine if this did not happen.

The second leg was increased income from non core banking services. Gains from equity investment grew by 104.4% to N0.419bn and  Other operating income of UBA grew by 39.8% to N5.451bn in 2018.

The 3rd leg was good hands on control over its overheard. Hence, Employee cost increased by only 3.17% to N71.158bn and Other operating expenses increased by 3.43% to N114.383bn.

The beauty of these relatively low growths was in the fact the interest income which they generated rose by 11.4% to N362.923bn ; and Fee and Commission rose by 13.3% to N93.997bn, all growth rates more than double overhead growth.

But UBA, of course, also had to balance on some shaky legs hence overall it ended up with only 2.46% increase in profit before tax to N106.766bn from 7.08% rise in gross earnings to N494.464bn.

The first major wobble was that 11.4% increase in interest income was associated with 33.3% leap in interest expense to N157.276bn leading to 0.96% drop in net interest income.

Much the same way, to generate the 13.3% growth in fee and commission, cost associated with it rose by 68.% to N28.551bn.

Then, as if reaching for the jugular, net trading income dived by 35.4% to N31.675bn thus actually accounting for reduced growth in gross earnings outside the double digit scored by other streams.

Any how, the 3 legs held and all that UBA suffered was a slight drop in profit margin to 21.6% from 2017's 22.6%.

From this, shareholders could appreciate that UBA directors recommending dividend total dividend of N0.85 per share ( including N0.20 interim paid earlier) is a gesture to stay in line with its liberal dividend policy, not necessarily because the year was so fantastic it was time to celebrate and smile broadly.

UBA. Plc Full year Nm
                            2018.         2017
Gross earnings 494,464.   461,761
Interest income 362,292.  325,657
Interest expense157,276. 118,025
Impairment.            4,529    32,895
Fee & Comm.        93,997.  82,937
    " Expense.          28,551. 16,967
Net trading etc      31,675. 49,063
Other Op income     5,452.   3,900
Staff cost.              71,158  68,972
Other op exp.      114,383  110,589
Equity gain                 419.         204
Profit B4 tax.       106,766. 104,222
Profit margin %       21.6.      22.6

Comments

Post a Comment

Popular posts from this blog

NAIROBI SE's HIGH PRICED EQUITIES.

In the wake of Nigeria's high priced quoted companies posted in this blog a while ago, Henates took a look to at Nairobi Securities Exchange June 23 official list to identify its high priced equities and the outcome was interesting too. Of the 66 companies quoted on the market by June 23, 15 or 22.7% were valued averagely at above 30 times nominal value. A word of caution though: There are two clear differences between the Nigerian stock market list and that of Nairobi: In the Nigerian one most listed companies have par or nominal value of N0.50 as is there is an implied agreement on this. On the other hand, at Nairobi most of the equities do not share common par value, they differ greatly. Then another thing, Nigerian equities are not valued below par, Nairobi ones can and many are so valued. Of the top 15 high priced equities at the Nairobi market, Safaricom topped with because by June 23, at 23.25 Ksh average price, it was valued 465 times its nominal value of just 0.0...
Read more

2018: TWO BLOWS TO UNITED CAPITAL PLC.

When a child who in a previous examination scored 80%, comes home with a new report in which he now scores 67.2%, the parents have a right to sit him down and ask how come. So it must be between Nigeria's United Capital Plc and its discerning shareholders since the release of the company's 2018 audited figures. In 2018, all said and done, says the annual report, United Capital ended with 67.2 % profit margin compared to 80.2% in 2017. How come? What comes across from the figures was that the company received 2 blows to the jugular in 2018: Sharp drops in Investment income and fair value gain. Investment income dropped by 10.8% to N4422.8m from N4965.2m while fair value on financial assets plunged by 79.7% to N6.173m from 2017's N30.387m. In view of both drops, the group's gross earnings grew by only 33.9% to N9259.4m despite strong growths in net trading income, and net operating income leap to N757.5m from N143.5m  Other income streams ended with single digit increase....
Read more

NIGERIAN TRADE SURPLUS DOWN 29.6% 2ND QUARTER

The Nigerian economy that emerged recently very marginally from recession seems to be heading to its old self destructing ways again. According to 2016 second quarter trade statistics released by the National Bureau of statistics today, September 13, Nigerian's trade surplus dropped by 29.6% to N506.5bn compared to N719.4bn in the first quarter. This occurred as imports grew by 13.5% to N2295.5bn and exports rose by only 3.2% to N3102bn making total trade to grow by 7.7% as driven purely by imports growth. Compared to second quarter of 2016, however, imports grew by only 9.97% while exports rose by 73.48%. Imports grew in double digit on Q1 more because import of solid minerals jumped by 1527.4% within the same perios,; of energy products rose by 177.77%; raw materials by 17.4% and of Agricultural products by 16.01%. On the other hand, export growth was weaker as exports of solid minerals dropped by 27.5%; of manufactured goods declined by 17% and of agricultural products by 1.03%....
Read more