United Bank for Africa or “UBA’’ Plc is an embodiment of consistency, and little wonder it has continued to ensure shareholders and investors are rewarded in the form of bumper dividend and share appreciation.
Everyone likes a successful company, one that continually delivers stellar performance, but only hard working and resilient oarsmen can steady a ship amid a tempest.
The entire management and board of directors of UBA deserve a pat at the back for consistently and steadfastly maintaining good asset quality and growing earnings over the past decade even amid two sharp drops in crude oil price that elicited recessions.
Since 2017, the lender has been growing its return on equity, a metric that measures the extent to which an entity uses the resources of shareholders in generating higher profit.
For instance, UBA has been delivering higher returns to shareholders with an attractive valuation as (return on average equity) ROAE moved to 17.21 percent in 2020 from 16.19 percent in 2019 and 4.01 percent in 2018, according to data gathered by MoneyCentral.
Drilling down the numbers shows ROAE was at an all-time high of 22.0 percent in 2013, a period concomitant with benign macroeconomic environment as consumer wallets were willing to open their purse strings while inflation rates were at single digit.
In the last eight years, UBA has realized N586.48 billion in net income, despite the harsh regulatory environment and preponderance of inconsistent policies by the central bank.
What’s more, net income for 2020 was up 27.69 percent to N113.76 billion as at December 2020, largely driven by income from trade transition and electronic trading transactions.
Interestingly, the lender’s gross earnings of N620.37 billion is higher than the internally generated revenue of Lagos and Rivers State combined N404.10 billion as at 9 months 2020, according to National Bureau of Statistics (NBS) data.
Despite the precipitous drop in crude oil price caused by the coronavirus pandemic that undermined oil demand and exposed the banking sector to huge write-offs as customers reneged on obligation, UBA’s non-performing loans (NPLs) of 4.7 percent is within the regulatory threshold of 5 percent.
The pan African lender with branches across the continent has sprouted its total asset by 37.0 percent year on year (YoY) in 2020, driven largely by growth in investment securities, customer loans and cash reserves.
The Group maintains a well-diversified balance sheet, with over 50 percent of the assets in liquid, low-moderate risk instruments, customer loans and cash reserves.
The Group maintains a well-diversified balance sheet, with over 50% of the assets in liquid, low-moderate risk instruments.
Customer deposits continue to dominate the Bank’s funding mix (79%), even as CASA grew 64.8 percent YoY in 2020 following consolidation of the Group’s retail banking business.