UBA numbers, history offer shareholders ‘rights’ to comfort on anniversary month  

Tony Elumelu, group chairman, United Bank for Africa (UBA) Plc

Oliver Alawuba, group managing director/CEO, UBA Plc

In a year in which pan-African financial giant, United Bank for Africa (UBA) Plc turned 75, and in the month in which Nigeria will celebrate its 64th Independence, the financial institution is believed to be getting set to offload to its shareholders some bragging “rights” to more shares in Africa’s Global Bank, writes Phillip Isakpa.

In the month of Nigeria’s independence anniversary the United Bank for Africa (UBA) Plc, which has the intentional moniker of Africa’s Global Bank, has chosen to package a deserving ‘gift’ for its investors and shareholders in the form of a rights issue, details of which analysts and the market are sitting and standing pretty waiting to see its details unfold. Nigeria is where UBA Plc has its global headquarters but, as its moniker shows, it has a global spread, carrying its Africanness by way of its origin, to different locations on the globe. Yet, understandably we are still in September, and it’s only a few days before the country rolls out the drums to celebrate this very important anniversary; but it would seem the board and management of UBA Plc are trying to double this celebration for its shareholders by unfolding this rights issue in this anniversary month, more especially when you also note that 2024 is also the bank’s anniversary year when it turned 75 years of offering financial services to individuals, households, businesses and communities across Africa.

So, while analysts and the markets, and even more especially, investors, sit and stand pretty, an examination of some fundamentals and the history of the bank offers shareholders a lot of comfort even in their anticipation. It is the prism upon which to look at the financial behemoth that has transcended borders continental and intercontinental. The fundamentals, especially seen through its financial ratios and performances, are an excellent way to look at the strengths of the multinational bank and also see the impacts it has made over the years. Investors and shareholders often need this type of information for clarity and enable them to decide on the position to take when shares are brought to the market.

The starting point for a look at UBA’s numbers may well be at its most current, which gives everyone a sense of where the bank is at the moment. While the bank’s financial reports for the second quarter and half year 2024 are awaiting regulatory approval, before being made public, the numbers for the first quarter provide a lot of comfort going forward for anyone interested in the shares of the bank, especially if it is also about increasing the number of shares owned by an existing shareholder. Take a look.

It recorded huge profit growth that records showed to be the fastest in 10 years. For instance, profit before taxation recorded a growth of 155 percent in the first quarter to reach N156.34 billion, a year-over-year rise from N61.7 billion in 2023. The post taxation profit also jumped significantly by 165 percent to N142.5 billion from N53.5 billion a year ago.

When you drill down to the performance of these numbers by way of value to shareholders, earnings per share (EPS) jumped very well to reach N3.96 in Q1 2024, which compares favourably with a year ago when it was just N1.47 in 1Q 2023. Higher revenue helped profit margin to reach 36 percent from a year ago when it was 30 percent.

Also, another financial data shows that the bank, for more than three years, had its average EPS jump by 70 percent annually yet having its share price rise yearly by only 53 percent. One analyst said this represented a huge lag in earnings growth and that it shows value in the bank’s shares.

Growth can also be seen by looking at a full year’s performance. For UBA Plc, the full year performance for 2023 shows the steadiness of the bank’s management to produce results that reward investors, especially with its eyes on ensuring that consistent growth is achieved year-on-year.

In its 2023 financial results, UBA’s management capacity to raise performance stake is evident in the significant increase recorded in gross earnings by 143 percent from N853.2 billion in 2022 to N2.08 trillion.

The result for 2023 showed a remarkable and robust performance across all key metrics. The bank’s total assets appreciated 90.22 percent, soaring from N10.86 trillion in 2022 to N20.65 trillion by the end of 2023. The commendable increase was attributed to UBA’s continued strength and resilience, as well as its ability to effectively navigate the increasingly complex financial landscape.

The bank also recorded an outstanding profit before tax (PBT) in 2023, which grew by 277 percent to N758 billion, from N201 billion in 2022. The significant improvement in PBT was further reflected in the bank’s profit after tax (PAT), which  rose 257 percent, from N170 billion in 2022 to N608 billion in 2023. In addition, the bank’s cost-to-income ratio, which measures the bank’s efficiency, improved significantly from 59.2 percent in 2022 to 37.2 per cent in 2023.

The Tier-1 bank reported a 61.3 percent increase in loans to customers, from N3.4 trillion in 2022 to N5.5 trillion in 2023, while customer deposits rose  90.31 percent from N7.8 trillion in 2022 to N14.9 trillion in 2023, reflecting increased customer confidence, enhanced customer experience, successes from the ongoing business transformation programme and the deepening of its retail banking franchise.

In line with UBA’s impressive performance across other financial metrics, the group shareholders’ funds increased significantly by 120.2 percent from N922 billion in December 2022 to N2 trillion by December 2023.

Shareholders are always the beneficiaries under this circumstance. For instance, this performance by UBA and historically, led to the provisioning of N78.7 billion as final dividends  for 2023.

Oliver Alawuba, the group managing director/CEO, dwelled on the group’s shareholder’s funds which  crossed N2 trillion from N922 billion in 2022, and total assets which crossed the N20 trillion mark, with a 90.2 percent  Year-on-Year growth. He noted that the group is well positioned for further business expansion in FY2024 having closed FY2023 with Capital Adequacy Ratio of 32.6 per cent.

UBA Plc is steeped in history. Not many banks with its longevity and rich history are still able to establish themselves with relevance to the new times that we are in.

Muyiwa Akinyemi, UBA Group’s deputy managing director, during the bank’s 75th-anniversary celebration, reflected on its remarkable journey, noting UBA’s evolution from its founding as the British & French Bank in 1949 to becoming Africa’s leading financial institution, a testament to its resilience and adaptability.

“UBA today operates across four continents with presence in 20 African countries, United States of America, France, United Kingdom and UAE; and over the past 75 years, we have exemplified stability, reliability, and excellence in banking, achieving numerous milestones and positively impacting the communities that we serve,” Akinyemi said.

Oliver Alawuba, group managing director of the bank pointed to the high number of historical achievements achieved by UBA in the course of its history. Reflecting on this history, he highlighted the following pioneering achievements:

-First Nigerian bank to offer an Initial Public Offering (IPO) in 1970.

-First Nigerian bank listed on the Nigerian Stock -Exchange (NSE).

-First Nigerian bank to open branches in the USA and London,

-Pioneer in introducing mobile banking in Nigeria

-Introduced Leo, the first multilingual chatbot in Nigeria

-First Nigerian bank to launch successful Prepaid Cards across Africa

“Our commitment to exceptional customer experience as well as our financial strength and resilience over the years has been key to our success. Our robust performance, especially over the last couple of years, underscores our sound strategies and commitment to operational excellence. I am sure everyone in this room will agree with me that UBA remains an attractive investment opportunity as it continues to deliver exceptional value to our shareholders,” Alawuba also said at the time.

The GMD added that the bank’s diversified business model (Pan-African and international strategy) is justified by the contribution of its non-Nigerian business to the group’s results and reinforces its resolve to expand the market share of customers, funding, digital and transaction banking businesses across Africa.

“Driven by our customer service and execution-led delivery model, we will continue to expand our market share and create value for our shareholders and meet the expectations of our various stakeholders,” he stated.

There is everything to suggest that UBA has been built to be trusted for investors and shareholders to invest for better returns. The board and management speak to the need for this confidence building. For instance, Tony Elumelu, group chairman, following the bumper dividend payout for 2023, earlier this year enjoined shareholders to bank on the bank with their dividends. He showed his readiness to walk the talk when he said:

“I call on you shareholders to re-invest a substantial part of your dividends in our rights issues which will be announced soon, as we will be giving you the first opportunity to own a share in all the countries where we operate, I am advising shareholders, as you get your dividends, reinvest a significant part of it. As for my board members and I, we would be investing 100% of the dividends we get, because If we don’t do so, it means we would be leaving food on the table for others who did not labour for it.”

There are some key indices that UBA produces that stand it out. Its price to earnings ratio is 1.2x. As a pan-African bank you have to look at that against the African banking industry average of 4.8x.

The bank’s stock on the Nigerian Exchange has been doing well with analysts projecting the price could rise by 37 percent. Last year, it turned out that the stock had rallied +237 percent to become the best performing bank stock.

Yet, there is even much more going for UBA Group, especially on the global scene. Its pan-African credentials have seen it spread subsidiaries across Africa, expanding to 20 African countries and with a global presence in financial capitals, including New York, London, Paris, Dubai and Shanghai with 25,000 staff and over 35 million customers.

The bank’s subsidiaries across Africa were responsible for contributing 55 percent of its profits in 2023, a testament to the positivity of the pan-African pursuit of the bank. It has signed a 3-year partnership with Africa Continental Free Trade Area (AfCFTA), something one analysts group described as ‘business accretive’.

UBA continue to be an influential financial institutions in the countries where it has offices and its leadership continue to be present on the world stage, including taking part in global events such as World Economic Forum (WEF), World Bank and International Monetary Fund (IMF) meetings, the United Nations General Assembly (UNGA) sideline events, among many others.

Through its influence and the respect it has garnered over the years, UBA was made the receiving bank for Nigeria’s first ever domestic dollar bond that recently raised $900 million. Many analysts covering the bank say there is a lot of great things still to come from the financial powerhouse.