United Bank for Africa (UBA) Group has started 2017 on a sound note growing its profits by 41 per cent in the first quarter of the year.
The unaudited results just released shows UBA recorded N25.5 billion in profit before tax during the period ending March 31, 2017, compared to N18.1 billion achieved in the first quarter of 2016.
The group also recorded a profit after tax of N22.4 billion in Q1, a 32-per cent year-on-year growth compared to N17.0 billion achieved in the corresponding period of 2016.
The group also sustained its strong profitability recording an annualized 19.4 per cent return on average equity.
Driven by an unprecedented 43 per cent year-on-year growth in interest income, the bank recorded a 38 per cent year-on-year growth in gross earnings to close at N101.2 billion for the period compared to N73.7 billion recorded in the first quarter of 2016.
In his remarks, the bank’s GMD/CEO Mr. Kennedy Uzoka, expressed satisfaction with the Q1 performance despite intensifying competition and a very challenging business environment.
“Our performance in the first quarter of the year strengthens our optimism on economic and business recovery in Nigeria and many of our markets across Africa. More importantly, this result is evidence of efficiency gains in our pricing, balance sheet management and operations.
“Driven by our balance sheet liquidity, we grew interest income by 43 per cent to an unprecedented quarterly run-rate of N77 billion. Buoyed by improving foreign currency supply in Nigeria, remittance and trade services fees almost doubled and foreign currency trading income grew by 148 per cent year-on-year, as we leveraged our Customer First initiatives to gain market share in these offerings. More so, it is my pleasure to report that we made further progress in our consistent retail penetration, as reflected in the 12 per cent year-to-date growth in retail savings and current account deposits.
“Notwithstanding the tight interest rate environment, we recorded a 30bps reduction in cost of funds to 3.4 per cent, a positive result of our customer service-led approach to low cost deposit mobilization. As at Q1, low cost savings and current accounts (CASA) represent 80 per cent of our deposit funding,” said Uzoka.
While emphasizing the increasing relevance of its African operations to its bottom line, Uzoka said: “Our businesses outside Nigeria continued to wax stronger, contributing 35 per cent of our earnings. We remained prudent in risk asset creation growing net loans by 2 per cent year-to-date, as we have continued to monitor development in key sectors of the economy to take advantage of emerging bankable opportunities in due time.
“Albeit the structural challenges that exist in Africa, the opportunities and returns are immense and compelling. We will deepen our penetration across our chosen markets, as we diligently execute our strategies for consistent market share gain.”
Also speaking, group’s chief finance officer, Ugo Nwaghodoh, said the Bank’s performance in the first quarter further proves its resilience and very strong prospect of the business across its chosen markets.
Beyond the sterling growth in top and bottom lines, he said he was remained particularly impressed with the quality of the earnings, which reflect the bank’s focus on the core business of financial intermediation and transaction banking.
“We remain steadfast on our prudent and proactive risk management, which helps to minimize the impact of the macroeconomic pressures on our portfolio. Our non-performing Loan ratio stood at 3.95 per cent, with 136 per cent provisions coverage, inclusive of regulatory risk reserve. We remain well capitalized and liquid to fulfill our growth strategy; 19.4 per cent BASEL II capital adequacy ratio and 41 per cent liquidity ratio, which present opportunity to explore the headroom in our low LTD of 61 per cent,” said Nwaghodoh.