Group Managing Director/CEO of the United Bank for Africa (UBA) Plc, Kennedy Uzoka, says the Pan-African financial institution recorded a 48 percent year-on-year growth in retail deposits and improved our CASA ratio to 77 percent.
The big financial supermarket is also optimising their funding mix, which will enhance their net interest margin (NIM), over the medium term. UBA announced her audited 2018 financial results, which indicates that the financial enterprise recorded impressive growths achieved across major financial lines in the year under review.
According to Uzoka, ‘’defying the relatively weak economic growth in Africa, earnings were positive and we grew our balance sheet by 20 percent, driven by the 23 percent growth in our deposit funding. In a period of economic uncertainty, we have focused on retail deposit mobilization, with exciting results. It will be recalled that the bank started wholesale banking operations in London, as it seeks to leverage the Group’s unique network across Africa, while also opening its 20th African operation in the same year.
‘’Our operations in the United Kingdom now offer end-to-end trade, treasury, structured finance, wholesale deposit taking and ancillary services. With this development, we are better positioned to fulfill our aspiration of deepening trade and capital flows between Europe and Africa. We are also pleased with the market acceptance of our new operation in Mali.’’
UBA has more than 65 years of providing uninterrupted banking operations, dating back to 1948 when the British and French Bank Limited (BFB) commenced business in Nigeria. BFB was a subsidiary of Banque Nationale de Crédit (BNCI), Paris, which transformed its London branch into a separate subsidiary called the British and French Bank, with shares held by Banque Nationale de Crédit and two British investment firms, S.G. Warburg and Company and Robert Benson and Company.
The 2018 financials filed at the Nigerian Stock Exchange shows that the Africa’s global bank’s gross earnings grew by 7.0 percent to N494.0 billion, compared to N461.6 billion recorded in the corresponding period of 2017. The Bank’s total assets also grew significantly by 19.7 percent to an unprecedented N4.9 trillion for the year under review.
For financial analysts, these results largely demonstrates the benefits of the Group’s Pan-African footprints with continued growth in market share in key countries of operation across Africa. The contributions of ex-Nigeria subsidiaries at 40 percent, again confirms the strong footing of the Group’s franchise in Africa.
Despite the challenging business environments in Nigeria and across key markets in Africa, UBA’s Profit Before Tax was quite impressive at N106.8 billion, a 2.4 percent growth, compared to N104.2 billion in 2017 financial year. In same vein, the Profit After Tax rose by 1.4 percent to N78.6 billion, compared to N77.5 billion recorded in 2017.
Due to lower foreign exchange trading income, Operating Expenses grew by 4.1 percent to N197.3 billion, compared to N189.7 billion in 2017 The bank’s net loans recorded stood at a prudent 3.9 percent growth to N1.72 trillion, while customer deposits increased by as much as 22.5 percent to N3.3 trillion, compared to N2.7 trillion recorded in the corresponding period of 2017; to reflect increased customer confidence and enhanced service channels in the year under review.
The Shareholders’ Funds however, decreased marginally by 4.8 percent to N502.6 billion, reflecting the impact of International Financial Reporting Standards 9 (IFRS 9) implementation.
Uzoka said he remained confident that UBA’s performance would be stronger in the years ahead and shareholders will enjoy even greater dividends, as the Group “is well positioned to take advantage of imminent fiscal reforms across many economies in Africa, a positive outlook which should stimulate new opportunities in infrastructure, manufacturing, agriculture and resource sectors.’’
Continuing, he said ‘’I am excited by the profitability of our ex-Nigeria subsidiaries, which now contributes an impressive 40 percent earnings to the Group. At the moment, our Nigerian business is benefiting from our product and operational focus, gaining market share – most importantly, the increasing penetration of our retail offerings is reassuring, as this fundamental progress aligns with our strategy of focusing on sustainable growth. With great optimism, we look forward to a more rewarding 2019 for our shareholders, as we further sweat our resources and optimize productivity towards delivering superior returns.’’
Group Chief Financial Officer, Ugo Nwaghodoh, who also spoke on the performance, said that the improving mix of UBA’s funding base and asset pricing, reinforce a positive outlook on Net Interest Margin(NIM) and broader balance sheet efficiency.
He said while considerable investment in people, digital transformation and channel enhancement masked cost efficiency gains within the year, with cost-to-income ratio at 64 percent, ‘’we are convinced that our diligent execution of new initiatives will ensure the reduction of Cost to Income Ratio(CIR) towards our medium-term target.
‘’Our balance sheet is being positioned to take full advantage of market swings and our strong 25 percent capital adequacy ratio provides headroom for growth, even under a BASEL III scenario. As it stands, UBA has started the year on a good note and should sustain the momentum, as we work towards improving our Return on Average Equity (RoAE).’’
Arguably, UBA Plc is a leading pan-African financial services group, operating in 20 African countries, as well as the United Kingdom, the United States of America and with presence in France. The business was incorporated in Nigeria as a limited liability company after taking over the assets of the British and French Bank Limited who had been operating in Nigeria since 1949.
She merged with Standard Trust Bank in 2005 and from a single country operation founded in 1949 in Nigeria – Africa’s largest economy – UBA has become one of the leading providers of banking and other financial services on the African continent.