United Bank for Africa Plc, the lender operating in 19 countries on the continent has shown strength in its Full year 2015 financial as earnings spiked amid a slow growing economy.
The impressive results have validated management’s growth strategy while pursuing its strategic objective of maximizing the value of shareholders.
The lender’s consistent earnings rise in the previous quarters impacted positively on margins and return on equity (ROE).
For the year ended December 2015, UBA’s net income increased by 24.53 percent to N59.65 billion from N47.90 billion as at December 2014. Earnings per Share EPS jumped by 17 percent to 179k in 2015 as against 153k in 2014.
The lender’s bottom line got a boost from an 18.95 percent rise in interest income to N233.96 billion and a 29.29 percent increase in non interest income after impairment charges.
Africa’s largest economy is struggling with a sharp reduction in oil price that accounts for two thirds of government revenue and nearly all of foreign exchange earnings.
The uncertainty forced the Central Bank (CBN) to restrict the sale of dollars to banks. Banks say is the policy is hurting their profit and causing liquidity squeeze.
Despite the aforementioned challenges stifling the growth of banks, UBA’s has remained efficient and profitable as net margin increased to 18.93 percent in December 2015 as against 16.69 percent the previous year.
The Nigerian lender’s cost to income ratio (CIR); another measure of efficacy fell to 60.20 percent in the period under review from 64.25 percent in 2014.
A lower CIR means UBA is keeping costs to its barest minimum while remaining profitable.
UBA’s is intensifying on its risk management strategy as its NPLs are 2.10 percent, lower than the 5 percent threshold.
UBA was less aggressive in accepting interest bearing deposit, a strategy it deployed to reduce its finance costs.
This explains the flattish loans to deposit ratio at 49 percent while loans to advances to customers reduced by 3.73 percent to N1.03 trillion.
Deposit from customers fell by 3.70 percent to N2.08 trillion.
The Nigerian lender has declared a dividend of 40k, which translates to a yield of 11 percent. A company with an aggressive and steady dividend tend to attract investors and hence a possibility in the appreciation of share price.
UBA’s share price closed at N3.74 on the floor of the exchange while market capitalization stood at N123.71 billion. The bank’s total assets were flat at N2.75 trillion.