UBA sees earnings growth from equity investment in associate company

UBA’s group 49 percent ownership interest in UBA Zambia limited, an associate company’s ordinary share boosted marginally earnings recorded by the bank as at the end of Q3 2018.

BusinessDay analysis of the financials of UBA, a tier one deposit money bank in Nigeria, revealed that profit after tax of the bank increased slightly by approximately 1 percent during the first 9 month of the year 2018.

According to its financials, the banks’ earnings increased to N61.7 billion in Q3 2018 from N60.9 billion in Q3 2017.

A critical look into its result shows that share of profit of equity-accounted investee of the bank increased significantly within the period by 1,433 percent from N33 million to N506 million in Q3 2018.

During the period under review, net interest income of the bank slightly by 1 percent to N150.6 billion in Q3 2018 from N152.3 billion in Q3 2017. Slight increase was largely affected by a surge in its interest expense by 38 percent during the period. Interest expenses increased from N85.7 billion to N118.23 billion.

Meanwhile total non-interest income also increased slightly by 4 percent from N84.6 billion in 2017 to N87.6 billion in Q3 2018. This was largely contributed to by an increase in net fee and commission income by 9 percent and other operating income by 22 percent respectively. However, during the period, net trading and foreign exchange income declined by 6 percent.

Prior to this period, UBA recorded an impairment loss on loans and advances of N12.9 billion, however, in Q3 2018, loss on impairment was reduced by 17 percent to N10.6 billion. During the period, the bank recorded no specific impairment charge, portfolio impairment charge and portfolio impairment reversal. Meanwhile, write-offs on loans and advances declined by 47 percent from N3.7 billion recorded in 2017 to N2.1 billion in 2018.

Erstwhile, BusinessDay analysts have seen banks cut down on loans and advances to the real sectors of the economy in a way to minimize the risk of default due to the peculiarity of the current economy.

UBA books revealed that while loans and advances to customers declined by 3 percent during the first 9 month period of year, loans and advances to banks surged by 52 percent within the period from N20.6 billion to N31.4 billion in 2018.

Total equity of the bank declined 4 percent from N529.4 billion to N509.2 billion in Q3 2018.

YTD analysis of stock performance of UBA stocks shows stocks is down by 22 percent from an opening price of N10.41 to close at N8.10 as at Wednesday.