Tuesday, March 15, 2016 02:44PM /Investment-One Research
Q4 2015 results highlight:
• Mixed Net interest income: -1.7% q/q; +48.2%y/y
• Non-interest income: -62.3% q/q; -73.6% y/y
• PBT declined by -39.5% q/q; -18.8% y/y
UBA released its Q4 2015 results yesterday which came in weaker both on a q/q and y/y basis. PBT declined by -18.8% y/y to N11.09bn due to a -73.6% y/y contraction in non-interest income.
This offset the +48.2% y/y rise in net interest income, -141% y/y improvement in loan impairment charges and the -11.6% y/y reduction in opex. On a sequential basis, PBT fell -39.5% q/q despite the -118% and -8.4% q/q decrease in loan impairment charges and opex, respectively, as non-interest income shed -62.6% and net interest income fell -1.7% q/q.
We highlight that the weakness in the Non-interest income was due to the combination of N8.6bn loss in derivative instrument; other operating loss of about N1.9bn, which more than offset around N4.8bn in FX related gains during the quarter.
The company’s full year results were more positive as PBT climbed +21.8% y/y to N68.45bn, driven by a +30% rise in net interest income although non-interest income was down -12.8% y/y, loan impairment charges and opex were up +58.7% and +5.4% y/y, respectively.
Going forward, we see the company’s performance in Q1 2016 being reflective of weak economic output in addition to the low interest rate environment, which may lead to a contraction in loan book growth and net interest income, respectively.
The company proposed a final divided of N0.40kobo representing a dividend yield of 11.73% as at Monday’s price.
While our models are under review, we rate UBA (BUY). Our price target is N4.63.