Both United Bank for Africa (UBA) Plc and Access Bank Holdings Plc churned better than expected earnings, and the impressive performance earned them buy ratings on their stocks by investment houses.
- UBA is growing faster and provides better value at its current price versus Access Holdings.
- UBA has bigger margins, lower cost to income ratio, and higher return on equity than Access Holdings.
Bank stocks have helped underpin market performance as the sector’s year to date (YTD) return of 67.78 percent outperforms the NGXASI’s 30.58 percent. Shareholders will be getting bumper dividends as lenders are expected to maintain the growth momentum in earnings all through the end of the year given the current monetary policies favour them.
Why you might pick UBA Stock:
- Based on a lower forward P/E ratio and P/B ratio, UBA looks to be a better value buy.
- UBA posted higher revenue and profit growth as at Half-Year 2023.
- UBA is also more cost efficient as it has a lower cost to income ratio amid inflationary pressure.
- A return on average equity (ROAE) of 57.40% is three times Access Holdings’ (18.37%), which signals better utilization of shareholders’ resources in generating higher profit.
- UBA’s profit margin of 38.13% is, once again, double that of Access Holdings.
- Investors have rewarded UBA for its stellar performance as its shares have returned (YTD) 150 percent, which is higher than Access Holdings’ 93.53 percent as at October 20, 2023.
Final word on UBA vs. Access Holdings
Both value and growth investors will agree that UBA presents a better investment case than peer rival Access Bank in financial metrics as it has delivered superior returns on investment.
Of course, aside from foreign exchange gains and higher interest income that added impetus to Banks’ earnings, UBA got a boost from its operations or branches across the continent and in the United King down.
It is the largest pan African lender as it continues to expand its digital business which, aside contributing to earnings, is helping to magnify financial inclusion.
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