Friday, March 15, 2019 03:22 PM / NSE With Additional Notes from FBNQuest
Although UBA’s 2018 PBT of N106.8bn beat consensus 2018 PBT forecast of N101.4bn, PAT of N44.4bn missed consensus forecast of N77.1bn because of a negative result of –N33.3bn in other comprehensive income (OCI). The bank’s PAT implies a (post-tax & OCI) ROAE of 8.9%, well behind management’s 18.0% guidance. As such, we expect to see a subdued reaction by the market.
UBA’s Q4 2018 PBT grew by 7% y/y largely driven by loan recoveries of +N6.1bn (vs. –N20.0bn Q4 2017). Its 2018 loan loss provisions of N4.5bn implies a cost-of-risk of just 0.3%, well below ours and management guidance of 1.2% and 1.5% respectively.
In Q4, pre-provision profits fell by 22% mainly because of a -57% y/y decline in non-interest income. The bank reported a post-tax loss of –N3.7bn due to a negative result of –N22.0bn related to fx translation losses due to the consolidation of foreign subsidiaries.
The bank’s management has proposed a final dividend of N0.65 per share which is in line with our N0.65 forecast and implies a yield of 8.7%. Having paid an interim dividend of N0.20, the bank’s gross dividend of N0.85 implies a payout ratio of c. 65%
Year-to-date, UBA shares have underperformed the index. The shares have shed -3.3% ytd compared with the -0.9% return on the ASI.
We rate UBA Outperform. Our estimates are under review.
UBA Q4 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)
3. UBA Extends Closure Date On Its 2018 Interim Dividend of N0.20k – Sep 01, 2018
4. UBA Appoints Four New Board Members – Sep 01, 2018