UBA Pushes for Faster Growth; Top line Up 13.87%


Sunday, September 22, 2019 / 05.00PM / Proshare Research / Header Image Credit: medium.com

UBA saw one of the banking sectors strongest top line growths in H1 2019 as gross earnings (GE) rose from N203.69bn in H1 2018 to N257.92bn in H1 2019, or what amounted to a Y-o-Y growth of +13.87% (see chart 1)

Chart 1 UBA Gross Earnings (N'm) H1 2019

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Source: UBA financial statement for H1 2019


The bank also saw an increase of +5.67% in its operating expenses, as expenses grew from N103.70bn in H1 2018 to N109.59bn in H1 2019. The bank's operating income equally went up by+8.42% from N168.45bn in H1 2018 to N182.64bn in H1 2019.

The banking group's cost to income ratio fell to 60% in H1 2019 from 61.56% in H1 2018. The Non interest income to operating income ratio also grew from 34.06% in H1 2018 to 39.70% in H1 2019. Interest income grew by +9.39% from N187.29bn in H1 2018 to N204.89bn in H1 2019 while Net interest income dropped by -0.86% from N111.08bn in H1 2018 to N110.12bn in H1 2019.Non-interest income rose by +26.39% from N57.38bn in H1 2018 to N72.52bn in H1 2019. UBA Impairment decreased by -53.65% from N6.73bn in H1 2018 to N3.12bn in H1 2019.

Pushing Up The Assets, But Cutting Down Returns

UBA's total assets also grew by +4.77% from N4.87trn in Dec. 2018 to N5.10trn in H1 2019. UBA total liabilities increased by +4.41% from N4.37trn in Dec. 2018 to N4.56trn in H1 2019. The Impairment to loan ratio fell from 0.26% in Dec.2018 to 0.20% in H1 2019. There was a drop in the return on total asset by 2.19% in Dec.2018 to 1.38% in H1 2019. Return on Equity also declined from 15.64% in Dec.2018 to 10.46% in H1 2019. Non-Performing loan declined to 5.6% in H1 2019 from 7.2% in H1 2018 (Cost of Risk also declined to 0.3% in H1 2019 from 0.8% in H1 2018.

Chart 2 UBA on Impairments to loan in H1 2019

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Source: UBA financial statement for H1 2019

A Good H1 2019 Showing; But Ways To Go

The pan-African orientation of UBA has allowed it to diversify away from Nigeria's country risk considerations allowing it to ride the waves of faster growing economies in the continent and this perhaps explains why it has been able to grow top line earnings faster than its tier 1 counterparts. The bank appears to have managed its costs effectively as its Cost to Income Ratio (CIR) at 60% one of the best in the industry (only 3 banks have lower rates).

Chart 3 UBA Cost to Income Ratio (CIR) in H1 2019


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Source: UBA financial statement for H1 2019


UBA has had a relatively strong showing in H1, 2019 but analyst believe that like ETI  a lot of the heft of the half year has come from continental diversification of its business away from Nigeria which has had a rough business season.

Download Full H1 2019 Banking Sector PDF Report Here


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