BY BANYO TEMITAYO
PAN-AFRICAN financial institution, United Bank for Africa Plc, has said its customer deposits grew 48.1 per cent to N5.7 trillion in the 2020 financial year, driven primarily by additional N1.8 trillion in retail deposits.
This was disclosed by the Group Managing Director/Chief Executive Officer of the bank, Kennedy Uzoka, in a statement on Monday.
He disclosed this just as the bank announced its audited results for the full-year ended December 31, 2020, recording impressive growth across its top and bottom lines.
The 2020 audited financials, filed at the Nigerian Stock Exchange on Monday, showed that bank’s gross earnings grew by 10.8 per cent to N620.4 billion, compared to N559.8 billion recorded in the corresponding period of 2019.
The Bank’s total assets also grew by 37 per cent to N7.7 trillion for the year under review.
Despite the challenging business environment during the Covid-19 pandemic and the resultant effect on economies globally, the Bank’s Profit Before Tax was impressive at N131.9 billion, compared to N111.3 billion at the end of the 2019 financial year.
In the same vein, Profit After Tax rose remarkably by 27.7 per cent to N113.8 billion compared to N89.1 billion recorded at the end of the 2019 financial year.
On the cost side, Operating Expenses grew by 10.1 per cent to N249.8 billion, as against N217.2 billion in 2019, well below the average inflation rate of 13.2 per cent for the year, thus reflecting the bank’s cost effectiveness.
In its usual tradition of rewarding shareholders, the Bank proposed a final dividend of N0.35 kobo for every ordinary share of 50 kobo.
The final dividend, which is subject to the affirmation of the shareholders at its Annual General Meeting, will bring the total dividend for the year to N0.52kobo as the bank had paid an interim dividend of N0.17 kobo earlier in the year.
UBA recorded a remarkable 24 per cent growth (to N2.6 trillion) in loans to customers, whilst customer deposits increased by 48.1 percent to N5.7 trillion, compared to N3.8 trillion recorded in the corresponding period of 2019.
This reflected increased customer confidence, enhanced customer experience, successes from the ongoing business transformation programme and the further deepening of its retail banking franchise.
Commenting on the result, the Group Managing Director/CEO noted that the year 2020 was important for UBA Group, as it gained further market share in most of its countries of operation.
A statement from the Bank on Monday quoted him as saying, “We ended a very challenging year on a reassuring note. The Bank recorded double-digit growth in both our top and bottom lines, as gross earnings and after-tax profit grew by 10.8 per cent and 27.7 per cent to N620.4billion and N113.8 billon respectively.
“Return on equity was 17.2 per cent, even as our cost-to-income ratio moderated to 61.3 per cent. Our earnings per share of N3.20 is a 26.8 per cent growth from the preceding year, as we continue to ensure maximum value creation for our highly esteemed shareholders.
Uzoka added, “Despite the tumultuous impact of Covid-19 pandemic globally and across our 23 countries of operation, we created N519.0 billion additional loans as we continued to support our customers and their businesses. Customer deposits grew 48.1 per cent to N5.7 trillion, driven primarily by additional N1.8 trillion in retail deposits.
“As a global bank, we remain well capitalized and determined to successfully drive financial inclusion on the continent through our innovative products and vast network. Our capital adequacy and liquidity ratios came in at 22.4 per cent and 44.3 per cent, well above the respective regulatory minimum of 15.0 per cent and 30.0 per cent.
Speaking on the bank’s strategy, he said, “Our primary strategy will continue to focus on providing excellent services from our customers’ standpoint, putting the customer first always. Looking ahead, I am inspired by the achievements we have made since the launch of our transformation programme.
“We have expanded market share considerably across the geographies where we operate and are consolidating our digital banking leadership in Africa. We will continue to leverage our diversified business model and dedicated workforce to further strengthen our position as ‘Africa’s Global Bank’.”
Speaking on the performance, the Group Chief Financial Official, Ugo Nwaghodoh, said, “The persistent low interest rate environment in 2020 exerted significant downward pressure on margins. Notwithstanding, our interest income for the year grew by 5.7 per cent (to N427.9 billion), driven by 8.2 per cent and 7.5 per cent year-on-year growth on interest income on loans and investment securities respectively.
“Our interest expense declined by eight per cent (to N168.4billion) driven largely by a 34.2 per cent decline in interest expense on customer deposits in our Nigerian operations, bringing down the Group’s cost of funds to 2.9 per cent, from four per cent in 2019.
Nwaghodoh noted, “We have prudently stepped-up our reserves for loan impairments, hence the 37.4 per cent YoY growth to N22.4billion, implying a 0.9 per cent cost of risk. These reserves provide adequate cover for impairments and should help minimise the need for further reserves in the current year, in view of the improving global operating environment.
“Our NPL ratio has declined to 4.7 per cent (from 5.3 per cent in 2019), driven by growth in the loan book, robust credit risk monitoring architecture, and payment of Past Due Obligations (PDOs).
The CFO added that as Nigeria continued to see signs of recovery from the Covid-19 pandemic, led by resumption of economic activities across the globe, increase in consumer spending, and continued progress on vaccine deployment, UBA was well- positioned for greater synergy across the Group.
“We remain committed to our prudent risk management practices, and optimistic of best value for our stakeholders in the days ahead,” he added.
