UBA Group eyes $7.7trn MEASA economy in DIFC, Dubai landing

A grouping of at least 72 countries, three billion people and a gross domestic product (GDP) size of $7.7 trillion appears to have strongly grabbed the attention of the board of Nigeria-headquartered Africa’s global bank, United Bank for Africa (UBA), enticing it to make a landing in Dubai, the United Arab Emirates (UAE) in its on-going global push looking to tap opportunities that abound around the world.

Tony O. Elumelu, group chairman, UBA Group, last Thursday led a team comprising directors and management staff to plant the financial institution’s presence in a city that has become a magnet to business, finance and tourism enthusiasts, who see it not only for the exotic tourist beauty that it offers but as a gateway and connecting point for business and financial intermediation, an area for which the expertise of the financial powerhouse is well regarded.

The group will be strategizing to harness opportunities available in this grouping comprising countries in the Middle East, Africa and South Asia (MEASA), and UBA has been upfront stating that it plans to reinforce its strong franchise as Africa’s global bank, facilitating trade and capital flows between Africa and the rest of the world with the establishment of this Dubai branch.

UBA’s operations have been going on for over 70 years and it currently has presence in 20 African countries, the United Kingdom, the United States of America and France; and has now added the new branch at the Dubai International Financial Centre (DIFC), effectively extending its presence to the United Arab Emirates.

According to an information sheet made available to Business A.M., the new UBA (DIFC Branch) will operate under the Category 4 licence and will be regulated by the Dubai Financial Services Authority (DFSA), the financial regulatory agency of the special economic zone, the Dubai International Financial Centre.

The UBA group said it would use the operation of the branch to service corporate and financial institutions and customers across the Middle East with a core focus on correspondent banking, relationship management and advisory services.

Tony Elumelu, the chairman of UBA Group, a globally renowned entrepreneur and philanthropist whose foundation, The Tony Elumelu Foundation, committed and expended in excess of $100 million over ten years promoting entrepreneurship across Africa, explained at the launch of the new subsidiary in Dubai that with the group’s foray into the Gulf Region, UBA continues to focus on its strategic intent to lead the way when it comes to doing business in Africa.

“Collaborating with our franchises in 20 African countries and the major financial centres of London, New York and Paris, UBA (DIFC Branch) will facilitate the financing of trade transactions between the Middle East and Africa, enabling trade finance and investments,” Elumelu said.

“We have been looking forward to this day as it is the first time we will have a presence in this part of the world. We know that our international expansion is incomplete if we are not present in the gulf,” he added.

Kennedy Uzoka, UBA’s group managing director and chief executive officer, who also spoke at the event said, “Today, we are formally on four continents across the globe, operating in 24 countries, serving over 35 million customers and still growing.

“We are the only bank with Nigerian origin that has extended out of Nigeria to the UAE. Those before us have come through other locations and that shows the strength and respect the Dubai authorities have for UBA. Our presence in Dubai affirms that UBA is a strong franchise, expanding its reach across the world,” Uzoka said.

“The authorities and business environment here in the DIFC is phenomenal and UBA is seeing Dubai as the gateway for Africa and that is why we are here, to be closer to our clients, to be partnering with them and facilitate businesses and trade flows into Africa through the UBA franchise. So, we are super excited,” Uzoka enthused.

Vikrant Bhansali, who will be driving the new UBA operations in Dubai as chief executive officer, UBA (DFIC), said: “Trade, commerce and investments in Africa are expanding in the Gulf Region and Asia. Leveraging the presence of UBA Group in global financial centres, UBA (DFIC) will enhance the ability of the group to facilitate access of Gulf investors and banks to African markets. We will finance trade, facilitate commerce and help grow investment in Africa, across all sectors.”

Arif Amiri, chief executive officer, Dubai International Financial Centre (DIFC) Authority, said during the ribbon cutting ceremony that, “UBA (DFIC) attests to the strong relationship between Dubai and Africa. It is a beautiful start as we are looking forward to achieving more interaction, channelling more trade and investments into Africa, and with UBA DIFC, we are closer to achieving our objectives. DIFC will continue to seek partnerships that will deliver winning relationships as we have just witnessed with UBA Group.”

With the market now awaiting the release of its half year result for 2022, the first quarter performance showed UBA recorded 18.3 percent growth in gross earnings year-on-year from N155.4 billion in 2021 to N183.9 billion, with operating income also rising by 18 percent from N106.6 billion in March 2021 to N125.9 billion in March 2022.

Also, the bank’s total assets rose by 4.1 percent to N8.9 trillion in the period under review, compared to N8.5 trillion recorded at the end of the 2021 financial year; while shareholders’ funds grew by 2.6 percent to N825.7 billion from N804.8 billion in the period under review.

Leveraging on the growth in both interest and non-interest income, the bank’s profit before tax rose to N44.5 billion as at March 2022, up from N40.6 billion a year earlier, while profit after tax stood at N41.5 billion.

UBA sustained its strong profitability recording an annualised 20.4 percent Return on Average Equity (RoAE).

Ugo Nwaghodoh, group chief finance officer, giving a breakdown of the performance numbers, said, “Our Q1’22 financial numbers show we are off with a good start. Particularly, I am pleased with how we deployed our balance sheet in the period to grow revenues and increase our market share in a number of West African markets. Driven majorly by interest from customer loans and our investments in long-dated instruments, we grew interest income by an unprecedented quarterly rate of 15 percent to N125.1 billion.

“We drove down our annualised cost of funds by 11 basis points to 2.1 percent. This was achieved despite the uptick in the interest rate environment in the period,” Nwaghodoh said.

And just last month the bank announced that it had redeemed its $500 million 5-year Eurobond notes which had a maturity date of June 8, 2022. The notes were issued in 2017 at a coupon rate of 7.75 percent.

According to the bank, as part of its liability management strategies, in November 2021, the financial services group repurchased $310.9 million of the notes through a cash tender offer, notion that upon maturity, the outstanding portion of $189.1 million and the coupon of $7.3 million were paid.

“The Group’s selective participation in international debt markets is a testament to UBA’s robust and prudent liquidity management strategies, coupled with a very strong and diversified asset and liability management process,” said Kennedy Uzoka, the chief executive of UBA Group said at the time.

“Our significant customer base, diversified geographical spread and multiple decades of proven track record, continue to ensure that UBA is the preferred destination for investors, individuals, and businesses alike,” Uzoka had added.

A fact sheet shared with Business A.M. by the bank explained that United Bank for Africa Plc is a leading pan-African financial institution, offering banking services to more than thirty-seven million customers across 1,000 business offices and customer touch points in over 20 African countries.

It stated that with its presence in New York, London and Paris and now the UAE, the bank was connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance and ancillary banking services.