United Bank for Africa (UBA) has declared a record interim dividend of N2.00 per share for the first half of 2024, marking the highest interim payout in Nigeria’s banking sector.
This represents a significant leap from the NGN0.50 per share declared during the same period in 2023.
The move underscores the bank’s strong financial performance, despite facing challenges in foreign exchange earnings.
UBA’s gross earnings grew by 39.65% year-on-year, rising from NGN981.78 billion in H1 2023 to NGN1.37 trillion in H1 2024, as disclosed in a regulatory filing with the Nigerian Exchange Limited (NGX).
The growth was primarily driven by a 142.57% increase in net interest income, which surged from NGN278.11 billion to NGN674.63 billion. UBA attributed this to improved earnings on treasury assets and asset pricing adjustments that boosted yields.
However, non-interest income dropped by 48.21%, from NGN505.85 billion to NGN261.98 billion. This decline was largely due to a sharp drop in trading and foreign exchange gains, which fell by 76.5%, reflecting the impact of maturing derivative contracts.
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On the positive side, fees and commissions rose by 99%, contributing NGN250.62 billion to non-interest income, driven by a 108% year-on-year growth in e-banking income, which totaled NGN106.2 billion.
Operating expenses surged by 109.75%, reflecting higher fuel costs, AMCON levies, and inflationary pressures across UBA’s operational regions. As a result, the bank’s cost-to-income ratio rose from 28.87% in H1 2023 to 50.69%.
Despite these pressures, UBA managed a slight increase in pre-tax profit, which edged up 0.51% to NGN401.58 billion. However, post-tax profit declined by 16.36%, totalling NGN316.36 billion after a sharp rise in taxes.
UBA’s balance sheet also expanded significantly, with total assets increasing by 37.21% year-to-date to NGN28.34 trillion. The bank’s loan book grew by 26.1%, while deposits rose by 33.71%. Notably, UBA’s loan-to-deposit ratio dropped to 30.16%, reflecting a cautious stance on credit risk exposure.
Despite challenges, UBA’s robust capital adequacy ratio of 28.3% positions it well for future growth. Analysts expect the bank’s solid operational performance and growing digital banking business to support continued profitability and investor confidence.
Outlook
UBA’s strong asset mix, improved operational efficiency, and focus on digital banking are expected to support future earnings. With a dividend yield of 7.75%, UBA remains attractive for investors seeking income and growth.
(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)
