September 22, (THEWILL) – The attention of the global financial markets has been drawn to the commanding heights achieved by Africa’s Global Bank, United Bank for Africa Plc, amid challenging operating environment, as it concludes plans for the much awaited capital raise. Equally astonishing is the vigour and commitment the foremost Tier-1 bank has brought towards revolutionizing the financial services sector with unmatched digital technology in its expansion drive.
Emerging from the ruins of COVID-19 which knocked the economy into a second recession after four years of a similar episode in 2016, the speed with which UBA navigated Nigeria’s troubled economic landscape to maintain a grip on the industry leadership, made it a cynosure of the investing public. It underscores why its imminent capita raise will be a resounding success.
Unending success story
For a long time now, UBA has remained Nigeria’s most profitable bank with amazing balance sheet growth that put the 75-year-old bank atop the league of prominent financial services institutions. This position earned it a 610.3 percent growth in five years from 2019 to 2023 when its profit before tax (PBT) rose from N111.28 billion to N790.4 billion. This period also saw a 267.4 percent surge in the balance sheet to N20.6 trillion from N5.6 trillion in 2019.
While other banks struggled to find their feet in the tough operating terrain, UBA showed capacity for the right choices it made in the post-consolidation years – an era that consumed many banks and caused others to exist without their original identity in the quest for survival.
This development, which hinges on the bank’s excellent corporate governance culture, impacted positively on its subsidiaries in Africa and other regions. Consequently, the offshore locations have been consistent in their robust contribution to the expansion of the Group’s profit.
Today, United Bank for Africa Plc stands out among the fastest growing financial services institutions in the continent with presence across 20 African countries and driven by significant investment in digital technology.
Digital Revolution
A major factor in UBA’s success story is the superior service delivery derived from its focus on bringing modern banking to digital age. This resulted in the continued huge investment in technology; thus elevating ICT to a corporate priority aligned with a strong human capital strategy.
Of course, there has been a fierce competition among the banks in the domain of ICT as the players seek to out-do one another. But UBA’s success story is underscored by the exceptionally high e-banking revenue it has recorded.
For instance, data from the annual financial statements of the Tier-1 banks in particular, showed that UBA has maintained the lead in e-banking income among the industry players.
The e-banking income includes revenue from electronic platforms, such as mobile applications, USSD channels, Internet banking, ATM, PoS as well as other debit and credit card transactions.
Analysis of the FY 2023 reports of the Tier-1 group, in their holco status, revealed that the Big Five (FBNH, GTCO, Access Corporation, Zenith Bank and UBA) generated a total of N385.85 billion in e-banking revenue as against N277.14 billion in 2022, representing a 40 percent increase.
In all, UBA earned the highest e-banking income among the Tier-1 financial services institutions. The bank generated N125.57 billion from e-banking channels in 2023 representing a 32.5 percent of the Tier-1 group’s total e-banking revenue for the year.
By this, Africa’s Global Bank grew its e-banking income by 59 percent when compared with N75.94 billion it earned in 2022 to emerge the first in 2023.
Similarly, the Q1 2024 financial statements of the Tier-1 group (excluding FirstBank of Nigeria) which amounted to N108.95 billion against N64.32 billion, or 70 percent increase, followed the same performance trend.UBA’s N44.35 billion e-banking revenue in Q1 2024, representing 60 percent of the total e-banking income by the four Tier-1 banks, was the highest during the period.
The remarkable increase in e-banking revenue of the banks shows the high level of interest in alternative payment system by bank customers as the CBN pushes for expansion in financial inclusion across the country.
Elaborating on the bank’s e-banking revolution, the Group Managing Director/Chief Executive Officer, UBA Plc, Oliver Alawuba, said that the bank’s consistent investment in strengthening its digital channels has been paying off as UBA is well-positioned to meet the growing demand of its customers across Africa and beyond.
Alawuba said, “We have invested so much in digital banking. We have great digital banking capabilities and we also have a growing customer base. Today we have over 30 million customers across various platforms and these customers are doing their transactions seamlessly.”
“Over 90 percent of our transactions are done digitally and we are looking at 95 percent shortly. This has been helping us to ensure that we manage our cost of operations and to deliver excellent customer service to our customers over time,” Alawuba said during the bank’s new executives’ visit to the Nigerian Exchange Head Office in Lagos, in September 2022.
He further explained that the bank’s foray into the larger African market 17 years earlier had continued to yield dividend for the institution, as activities in the African market accounted for over 50 percent of the banks’ profitability, with room for even more opportunities going forward.
Growth Surge
UBA’s Q1 2024 financial results which showed very strong growth across key performance measures, stemmed from the previous year’s impressive record.
The results during the period saw outstanding year-on-year increases: Gross Earnings rose by 110 percent, from N271.1billion to N570.2 billion; Interest Income grew by 130 percent to N440.7 billion. Operating Income increased by 115 percent, from N175.7 billion in Q1 2023 to N378.59 billion.
Consolidating the record performance delivered in 2023, UBA again saw profit before tax rose significantly by 155 percent from N61.7 billion in Q1 2023, to N156.34 billion in Q1 2024; while profit after tax jumped from N53.5 billion to N142.5 billion, constituting an impressive165 percent rise year-on-year.
Commenting on the Q1 2024 results, Alawuba said the Group delivered a strong first quarter performance, building on the solid momentum of 2023, as well as the ongoing execution of its long-held strategy of customer focus, geographic diversification and effective risk management and governance.
He said, “Our record Q1 profit before tax was delivered with triple digit gross earnings growth, supported by very strong interest and non-interest incomes. Fees and commissions rose by 118% year-on-year on the back of improved efficiencies and continued digital adoption.
“This has helped drive improvement in efficiency and customer satisfaction, with the Group’s cost-to-income ratio held at 57.8 per cent.”
The Group’s balance sheet grew steadily with total assets increasing by 23 percent to N25.4 trillion. Customer deposits closed at N18.4 trillion, recording a 23 percent increase year-on-year, largely attributed to growth in current accounts and savings accounts.
“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,” the GMD/CEO added.
While reviewing the Group’s 2023 performance at its 62nd Annual General Meeting (AGM) in Abuja on May 24, 2024, the Chairman, Board of Directors, United Bank for Africa (UBA) Plc, Mr Tony Elumelu, noted that the over N2.08 trillion revenue and N607.69 billion profit after tax reported by the Group in the 2023 financial year, was the highest in the banking industry. The N2.08 trillion gross earnings represented a 413 percent jump.
Expanding Balance Sheet
UBA’s outstanding asset performance stemmed largely from a number of factors which includes a remarkable triple-digit growth of 139.5 percent in gross earnings from N835 billion reported in 2022 to N2 trillion in 2023.
This impressive triple-digit growth in gross earnings resulted in a year-on-year (YoY) increase of 277.19 percent in profit before tax (PBT) from N200.87 billion in 2022 to N757.68 billion in 2023.
Emphasising the importance of strong asset quality, Professor of Finance and Accounts at the Nasarawa State University, Keffi, Muhammad Mainoma, had told THEWILL that strong asset base is strategic to the development of any business because an enterprise is handicapped if it trades with a lean balance sheet.
“Strong asset base signifies that a business is strategically positioned to take advantage of its environment. For a bank, there is no time that people will not need money. Once a business is focused and invests in areas that people always need, it will not lose. This explains the continuous growth (in asset) despite the difficult operating environment,” Mainoma, a former president of the Association of National Accountants of Nigeria (ANAN), had said.
Elumelu noted that the bank sustained deposit mobilization efforts, growing total deposits by 93 percent to N17.36 trillion from N8.99 trillion which was reported in 2022.
The bank also maintained a well-structured and diversified balance sheet, with total assets and shareholders’ funds reaching N20.65 trillion and N2.03trillion respectively.
The impressive financial outcomes were propelled by a significant increase in net interest income, due to a combination of a strong expansion in the loan portfolio, higher net interest margins and a substantial contribution from foreign exchange operations.
Also, FX operations benefited from increased business activity and improved profit margins.
Additionally, the bank’s loan book expanded by 61 percent to N5.55trillion, from N3.44trillion, consequently, Non-performing Loan (NPL) ratio reached 5.85 percent.
“Behind each of these figures, is the everyday work of our dedicated staff, providing tangible solutions to real-world needs, delivering value to consumers, businesses and governments,” Elumelu stated, as the bank approved a N2.80 per share dividend to shareholders.
Continental Impact
UBA was named the ‘African Bank of the Year’ at the 2023 Bankers Awards organised by The Banker Magazine — a publication of the Financial Times of London last December.
Dominating the African continent, UBA not only clinched the title of African Bank of the Year at the event, but also propelled its subsidiaries to victory in eight additional African nations.
The bank’s subsidiaries in Cameroon, Chad, Ghana, Cote d’Ivoire, Mozambique, Congo, Sierra Leone, and Tanzania all emerged as the Bank of the Year in their respective countries.
According to the statement, it would be the second time in the past three years that the bank has won the regional award as the best bank in Africa, after winning the title in 2021.
Alawuba said the recognitions came as a reassurance that the bank was on track in its goal of consolidating its leadership position in Africa, and creating superior value for its stakeholders
“UBA is honoured to be named the Bank of the Year in these eight countries and to receive the overall Award for Africa,” he said.
He added, “We remain committed to delivering top-notch banking services that positively impact the lives of our customers across the continent.
“We have our millions of customers across the globe and our many thousands of staff to thank for this. They are the very reason why we keep winning and receiving these accolades.”
Joy Macknight, Editor of the Banker Magazine, said UBA remains a clear winner across a wide range of criteria, having performed impressively across its footprint with a strong financial performance across most of its markets.
“In a year of strong competition among the continent’s major banking groups, UBA has gained the edge on its rivals to win the Bank of the Year award for Africa for the 2nd time in three years,” she said, adding that the award recognized the bank’s strength across Africa, including many of its most competitive markets.
Strong stock performance
Africa’s Global Bank, United Bank for Africa (UBA) Plc, on Monday, January 8, 2024, joined the elite group of companies with market capitalization of over N1 trillion just as its share price value hit N29.90 per share.
At the close of trading on that day, the bank’s market capitalization hit N1.022 trillion making it the 3rd most capitalized financial institution in Nigeria, a remarkable lift from N283.8bn at the beginning of 2023. The bank has 34,199,421,366 shares in issue.
UBA’s N1trillion market capitalization mark came amidst the bank’s share emerging the highest performing stock in the banking sector in 2023, which underscores the bank’s robust growth trajectory and unwavering market confidence.
Specifically, between the start of January 2023 and that day, the price of UBA shares appreciated by over 250 per cent from N7.60 per share.
Elumelu noted that the bank’s remarkable journey in 2023 culminated with its shares being acclaimed as the highest performing stock within the banking sector, as he pointed out that this not only highlights the bank’s strategic prowess but also reflects its commitment to delivering unparalleled value to shareholders and stakeholders alike.
“As UBA celebrates these significant milestones, we will like all our stakeholders to know that we remain steadfast in our mission to drive sustainable growth, foster innovation, and create value for its diverse clientele across Africa,” Elumelu said.
“We are witnessing the impact of the business transformation drive UBA embarked on years ago and executed well. Naturally, the market has taken note of and is duly rewarding our efforts. To our stakeholders, our promise is that we will continue to work harder, deliver on what we know how to do well and create impacts across geographies where we currently operate.” he further said.
Capital raise
The Group is undertaking urgent necessary actions to meet the new minimum N500 billion equity capital requirement to maintain its international authorisation within the timeframe stipulated by the Central Bank of Nigeria (CBN). This will strengthen its presence in key markets to continue positioning for sustainable growth and value addition for stakeholders.
Investors and industry experts believe that the capital raise would be hugely successful. According to the National Coordinator, Pragmatic Shareholders Association, Mrs Bisi Bakare, the bank’s strong legacies would earn it the required patronage.
“I believe the UBA’s capital raise is going to be successful considering industry records in the financial markets for many years. For two decades, there is no financial year UBA did not pay dividends to her shareholders. We have benefited in terms of capital appreciation too. There is no doubt that the public offer is going to be successful,” Ms Bakare told THEWILL in a note.
An investment expert, Anthony Omojola, said UBA is coming to the market when the awareness is high because other banks have performed their public offers. He noted that the bank’s multi-window approach in the capital raise places it in a good setting for a successful outing.
“They still have about one and half years to meet the deadline but the earlier the better because the Nigerian economy is very unpredictable,” Omojola said, adding “the combined issues are the best for them to ensure full subscription since they are not the first to come to the market.”
Momentous 2023
Some stakeholders believe that the forthcoming UBA’s public offers would be oversubscribed given the bank’s towering image in the industry and events of the immediate past year.
The outgone year, 2023, was a splendid year for UBA remaining the most profitable bank in Nigeria, with a shareholders’ fund that had grown from 992 billion as at FY 2022 to N1.8 trillion as of December 2023. UBA was also appointed as the Local Arranger and Local Depository Bank for the $3.3 billion FX Liquidity support facility for Nigeria in partnership with Africa Export and Import Bank (Afreximbank), providing solutions to economic challenges in Nigeria, characterized by shortage of Fx liquidity.
Likewise, in 2023, UBA won the 2023 FMDQ Gold Awards in three Categories including the Best FX Liquidity Provider; Dealing Institution of the Year and Best Money Market Liquidity Provider. This recognition is a testament to UBA’s impressive capital strength.
THEWILL also recalls that UBA emerged Global Finance’s Best SME Bank for 2023 in Nigeria, Ghana, and Mozambique awards that spotlight the bank’s continuous resolve towards supporting small and medium scale businesses which is the life of any growing economy.
Also, the bank, with presence in 20 African countries won the 2023 FMDQ Gold Awards in three key categories of Money Market Liquidity Provider; FX Market Liquidity Provider and Dealing Member of the Year, while UBA was also named as Global Finance’s Safest Bank in Senegal 2023
United Bank for Africa, or UBA, is the leading sub-Saharan African bank with over 45 million customers, 20,000 employees, and 1,000 branches across 20 African countries
UBA provides corporate, commercial, SME, consumer and personal (retail) banking services to more than 45 million customers, served through diverse channels: over 1,000 business offices and customer touch points with 2,669 ATMs, 87,223 PoS, and robust online banking services.
UBA supports consumers across Africa and globally, seeking secure and convenient payment methods, businesses requiring modern payment acceptance solutions, and issuers and acquirers in need of innovative offerings for their customers.
The bank equally facilitates governments in promptly distributing payments to individuals during crucial times of need.
United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than twenty-five (25) million customers, across 1,000 business offices and customer touch points in 20 African countries. With presence in New York, London, Paris, and Dubai, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance and ancillary banking services.
In line with its usual custom of rewarding loyalty, Africa’s Global Bank, UBA announced the “UBA Legacy Promo” as part of activities to mark its 75th year anniversary.
This landmark campaign has been specially designed by the bank to celebrate UBA’s rich legacy spanning over 75 years, as well as the bank’s longstanding commitment towards rewarding its loyal customers in a grand style.
The UBA Legacy Promo which will run for a period of six months beginning from July 2024, will see the bank doling out of N200m in cash prizes as well as other consolidation prizes to its teeming customers from various categories.
Due to the availability of online banking, certain banks have seen a growth in their digital channels. Semrush data shows that the UBA was ranked number one, with 2.36 million visits in June 2024.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
