UBA consolidates resilient performance, pan-African footprint ahead of capital raise

In its audited financials for 2023, released earlier in the year, the United Bank for Africa (UBA) posted a record N607.7 billion in annual net profit after a significant increase in interest income and foreign exchange gains impacted its bottom line by 256.9 per cent.

Gross revenue for the pan-African financial services group advanced to N2.1 trillion from N853.2 billion while interest income from lending and investment securities nearly doubled to N1.1 trillion, helped by the longest cycle of monetary policy rate tightening in Nigeria.

In his intervention, UBA’s Group Managing Director/Chief Executive Officer, Oliver Alawuba, said: “I am very pleased with the unprecedented results achieved by our Group in FY2023. The Group made a profit before tax of N758 billion from N201 billion in the prior year. The balance sheet also grew to N20.7 trillion from N10.8 trillion in the previous year.

“The Group’s shareholder’s funds crossed N2 trillion from N922 billion in 2022, whilst total assets crossed the N20 trillion mark (90.2% YoY growth). The Group is well positioned for further business expansion in FY2024 having closed FY2023 with a Capital Adequacy Ratio of 32.6%.”

Mr Alawuba added that the bank’s diversified business model is justified by the contribution of its ex-Nigeria business to the group’s results and reinforces its resolve to expand its market share of customers, funding, digital and transaction banking businesses across Africa.

“Driven by our customer service and execution-led delivery model, we will continue to expand our market share, create value for our shareholders and meet the expectations of our various stakeholders,” he stated.

In the first quarter of 2024, the bank consolidated the record performance delivered in the Group’s 2023 Audited Financials, as Profit Before Tax rose significantly by 155% from N61.7 billion in Q1 2023, to N156.34 billion in Q1 2024. In the same breath, Profit After Tax jumped from N53.5 billion to N142.5 billion, representing a rise of 165% in one year.

The group’s Q1 results, which were released to the Nigerian Exchange Limited (NGX) in May, saw outstanding year-on-year increases: Gross Earnings rose by 110%, from N271.1billion to N570.2 billion; Interest Income grew by 130%, to N440.7 billion. Operating Income increased by 115%, from N175.7 billion in 2023 to N378.59 billion.

Mr Alawuba said the group delivered a strong first-quarter performance for the year, building on the solid momentum of 2023 and its long-held strategy of customer focus, geographic diversification and effective risk management.

“The Group’s balance sheet grew steadily with Total Assets increasing by 23% to N25.4 trillion. Customer deposits closed at N18.4 trillion, recording a 23% increase year-on-year, largely attributed to growth in current accounts and savings accounts,” he said.

“Our unwavering commitment to sound governance, robust risk management, and financial strength positions us for continued growth, while we contribute meaningfully to inclusive economic development across our network.”

Global, Pan-African Imprint

With its origins dating back to 1949, UBA has carved a niche for itself as a leading financial institution in sub-Saharan Africa, growing into one of the continent’s most important banks.

The bank consolidates its presence across 20 African countries, as well as key international financial hubs, including New York, London, Paris, and Dubai.

UBA, famed as “the only Sub-Saharan African Bank with a truly global presence”, consolidates on operations in Africa, Europe, the Middle East, and North America.

This international expansion has transformed the bank from a national bank into a global financial institution with over 35 million customers.

UBA says its ability to bridge African economies with global markets allows it to support cross-border trade, remittances, and investments that are essential for Africa’s economic development.

With its strategic global presence, the bank also acts as a crucial conduit for facilitating trade, foreign direct investment, and cross-border transactions, making it a critical player in the economic integration of Africa with global markets.

Subsidiaries

UBA’s balance sheet, which has grown steadily over the years, is now heavily driven by its African operations. According to the bank, over 50% of its balance sheet is derived from its African subsidiaries—a remarkable milestone that underscores its deep integration into the economies across the continent.

In 2023, the Executive Director/Chief Executive Officer of UBA Africa, Abiola Bawuah, noted that notwithstanding the impact of devaluations and double-digit inflation in Nigeria and a number of other African countries where the bank operates, the subsidiaries have been performing well, contributing significantly to the growth and development of trade, infrastructure and finance on the continent.

“As of last month, none of our African subsidiaries is making a loss. They have all been turning in profits, this is a testament to the fact that they have navigated successfully and have all found their footing,” she said.

“And this extends to each and every one of them, even the ones in war-torn countries. Of course, we are aware that there is always room for improvement, but for now, we are glad that our 19 subsidiaries are out of the red zone.”

The bank is counting on these potentials ahead of the deadline for the recapitalisation exercise in the Nigerian banking sector.

CBN Directives

The Central Bank of Nigeria (CBN) in March announced an increase in the capital base for different categories of banks in the country.

A statement by the CBN’s Acting Director of Corporate Communications, Hakama Ali, said the capital base of banks with international authorisation had been increased to N500 billion while that of national banks was increased to N200 Billion.

The CBN noted that commercial banks with regional authorisation are expected to achieve a N50 billion capital base. In contrast, merchant banks are expected to shore up their capital to N50 billion as the minimum capital requirement.

The apex bank directed non-interest banks with national and regional authorisations to boost their capital to N20 billion and N10 billion, respectively.

According to the banking industry regulator, the policy shift was made “in furtherance of its statutory responsibility to promote a safe, sound and stable banking system and in line with Section 9 of the Banks and Other Financial Institutions Act(BOFIA) 2020,” the statement said.

Olayemi Cardoso, the apex bank chief, is on a drive to help President Bola Tinubu attain his dream of a $1 trillion economy by 2030 and had enjoined banks as early as last November to brace up for a capital raise that will enable them to boost capital adequacy and accelerate an economy that has seen sluggish growth since exiting a recession three years ago.

The CBN noted that all banks are required to meet the minimum capital requirement within 24 months, commencing from 1 April and terminating on 31 March 2026.

Outlook

Speaking in May, the Chairman of the United Bank for Africa (UBA), Tony Elumelu, expressed confidence that the bank would meet the Central Bank of Nigeria’s (CBN) new capital requirement of N500 billion ahead of the March 2026 deadline.

Mr Elumelu spoke against the background of the CBN’s directive that mandates all commercial, merchant, and non-interest banks, as well as promoters of proposed banks, to increase their capital base within 24 months starting from April 2024.

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Speaking at UBA’s Annual General Meeting (AGM) in Abuja, Mr Elumelu assured shareholders and investors of the bank’s commitment to achieving the recapitalisation target.

He highlighted UBA’s strengths as Africa’s global bank and emphasised its dedication to innovation, operational rigour, and shared value creation.

“UBA remains resolute in its unwavering commitment to innovation, clarity of purpose, operational rigour and, most importantly, shared value creation. We are confident that by staying true to these core principles, UBA will continue to deliver exceptional value to our stakeholders and play a pivotal role in shaping a brighter future for Africa.

“In terms of recapitalisation, let me assure you, my esteemed stakeholders, that we will meet the target ahead of the CBN deadline,” he stated.