Nigeria: UBA – Core Banking Operating Segment Supports Growth in Profitability

Nigeria: UBA - Core Banking Operating Segment Supports Growth in Profitability

On the heels of a severe operating environment, United Bank for Africa Plc (UBA) maintained an impressive performance in its core banking operating segment to support growth in profitability and outshine its peers.

The pan-African bank’s nine months ended September 30, 2021 result and accounts showed an impressive performance on the heels of severe challenging business and economic environment that emerged from the slow pace of activities following the global lockdown occasioned by the Covid-19 pandemic.

UBA in the period grew its top-line performance and bottom-line performance as the management was prudential in managing cost and growing non-core banking operations.

Growth in Core banking operations

The Group’s interest income grew by 8.4 per cent to N343.71billion in nine months of 2021 from N317.14 billion recorded in nine months of 2020 as its contributory lines save for cash and bank balances (-12per cent to N10 billion) recorded gains – interest on loans and advances to banks (+421.2per cent to N13.73 billion), loans and advances to customers (+9.8per cent to N187.06 billion), and investment securities (+0.1per cent to N132.92 billion).

Interest expense declined by 12.7per cent to N114.44 billion in nine months of 2021 from N131.12billion in nine months of 2020 as the bank recorded substantial moderations across the various liabilities categories.

The most decline emerged from interest expense on deposits from financial institutions (-57.6 per cent to N6.73 billion) and expenses on customer deposits (-5.8 per cent to N78.49 billion), as the bank’s CASA mix slightly improved (nine months of 2021: 82.3per cent as against 2020FY: 81.8per cent).

The combined impact of higher interest income and lower expenses on liabilities drove net interest income higher by 23.2 per cent to N229.27 billion in nine months of 2021 from N186.02 reported in nine months of 2020/

This was further supported by the decline in loan impairment charges (-70.3per cent y/y to N3.41 billion), as macro-economic conditions and obligors’ repayments improve. Consequently, net interest income ex-LLE expended by 29.4per cent y/y to N225.86 billion.

Contrastingly, non-interest income declined by five per cent to N102.42 billion, due to the lower marked-to-market gains from trading investment securities (-50.4per cent to N8.24 billion) and FX revaluation losses of N11.20 billion compared to the gains of N9.23 billion in the nine months of 2020.

The declines across these lines outweighed the impressive growth in FX trading (+78.8 per cent to N35.56 billion) and net fees and commission (+18.6per cent to N45.77 billion) incomes.The gain in foreign […]

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