Tuesday, September 23, 2025
24.8 C
Lagos

UBA Reports N206bn Interest Income in H1 2020

Kennedy Uzoka

Group Managing Director/CEO

UBA Plc

The United Bank for Africa (UBA) Plc released its audited H1-20 numbers recently, which showed that interest income increased by 0.3% y/y to NGN205.59 billion, supported by the growth across major contributors to the line, with the largest contributions coming from loans and advances to customers (+9.9% y/y to NGN113.89 billion), and loans and advances to banks (+77.5% y/y to NGN2.17 billion).  

On the EPS of NGN1.24 (-23.5% vs. H1-19), the Board has proposed an interim dividend of NGN0.17/s (H1-19: 0.20/s), which equates to a yield of 2.6% based on the closing price of NGN6.55 as of the 1st of September 2020.
However, income from investment securities (-9.5% y/y to NGN83.04 billion) declined as yields on assets have fallen in 2020 across OMO and other fixed income instruments. We expect this line to remain under pressure through the year, and as such underperform FY-19.
Interest expense declined by 9.0% y/y to NGN86.26 billion despite growth across most major interest expense lines. However, the reduced cost on deposits from customers (-19.9% y/y to NGN53.38 billion), as the bank’s CASA mix improved during the period (78.5% vs. 73.5% in H1-19), was able to offset the impact. Consequent to the growth in income and decline in expense, the bank recorded an expansion in net interest income of 8.4% y/y.

According to Cordros Research, the bank still has some scope for gains here given that the CBN has now reviewed the minimum rate on savings deposits down to 10.0% of MPR (30.0% previously).

“We expect this will sustain net interest income growth in the year, even as interest income from loans may pare q/q through the rest of the year.”
Non-interest income grew during the period by 6.7% y/y to NGN77.74 billion, driven by the growth in fees and commissions income (+7.0% to NGN38.58 billion) and FX revaluation gains (+619.8% to NGN7.80 billion).

As expected there were declines in income from investment securities (-19.6% y/y to NGN13.84 billion) – given the LDR limit which reduced capital allocation –, and FX trading (-7.3% y/y to NGN13.37 billion) – given FX illiquidity.
Operating expenses settled 20.6% higher year-on-year, driven primarily by increased personnel expense (+19.9% y/y to NGN44.57 billion) and regulatory costs – AMCON levy (+12.1% y/y to NGN22.42 billion) and NDIC premium (+12.2% y/y to NGN5.58 billion).

Consequently, the bank’s cost-to-income ratio (ex-LLE) settled higher at 69.8% relative to 60.9% in the corresponding period of the prior year.

This pressured the trickle-down from the income line and resulted in profit-before tax declining significantly by 18.7% y/y to NGN57.13 billion. Consequently, profit-after-tax settled 21.7% lower y/y at NGN44.43 billion, despite a lower income tax expense (-6.2% y/y to NGN12.70 billion).

spot_img
spot_img

Hot this week

NCDMB ES: African Nations Must Collaborate to Develop Oil Sector

Close partnership and collaboration among African oil and gas...

NCDMB Boss Commends West African Ventures, Seeks Investment in Deepwater Operations

The Executive Secretary of the Nigerian Content Development and...

Ecobank Design & Build Expo: Global & Local Giants to Showcase Cutting-Edge Products in Lagos

Leading global and local brands in the building, design,...

Fidelity FNITCC Confab: Atlanta Mayor Highlights Economic Ties with Africa

L – R: Managing Director/Chief Executive Officer, Fidelity Bank...

HRM Igwe Maduagwuna of Awba-Ofemili Commends The Village Priest Author, Remmy Nweke

His Royal Majesty, Igwe Ezekwesili Maduagwuna, Ofemili I of...

Topics

RE: Online Publication on Purported Sale of Polaris Bank  

Our attention has been drawn to an online report...

Emirates – A Flight of Fortune

The story of Emirates is no less fascinating each...

Leadway Assurance: ‘Nigerians Should Buy Term Life Assurance Policy’

Ms. Adetola Adegbayi, Executive Director, Leadway Assurance Company Limited...

FG Tasked on National Protein-led Nutrition Policy

The Federal Government has been called upon to urgently...

GTBank Fashion Weekend 2018 Set for November 10

From Saturday, the 10th to Sunday, the 11th of...

Sovereign Trust Insurance Partners Rotary Club on Project Wash

Sovereign Trust Insurance Plc in collaboration with Rotary Club...

MTN Withdraws Suit Against NCC over N780bn Fine

MTN Nigeria says it has withdrawn the suit it...

Olubunmi Familoni Wins 2024 edition Nigeria Prize for Literature

2024 Winner of The Nigeria Prize for Literature, Familoni...
spot_img

Related Articles

Popular Categories

spot_imgspot_img