Fact behind UBA’s growth numbers, by finance chief

Non-Performing Loans rise to 3.9%

The positive financials of United Bank for Africa Plc (UBA) amid challenging economic situation in the country has been attributed to rise in the contributions of foreign subsidiaries, exchange rate gains and quality technology-backed operations.

The bank’s Group Chief Finance Officer, Ugo Nwaghodoh, while speaking with select journalists at the weekend, said the group reaped from its long standing outposts across the continent, with record showing 33 per cent contribution in 2016, from 10 per cent in 2015.

Already, the bank has unveiled plans to expand its regional footprints to seven more countries in the next seven years, describing its profit from Ghana subsidiary as capable of standing side-by-side with some banks in the country.

While Nigeria, the bank’s major market is in recession, 18 of its foreign subsidiaries sustained its double-digit growth record, as the group pioneers electronic banking and develops services in those markets with lots of results.

He noted that fee and commission income also rose 18.3 per cent year-on-year to N73.2 billion from N61.9 billion, representing 77.3 per cent rise in electronic banking income to N30.5 billion from N17.2 billion in 2015.

Presently, the banking group boasts of more than seven million electronic cards, with about five acquired in Nigeria and about two million from foreign subsidiaries.This came just as the bank invested heavily in acquisition of new technologies and upgrade of existing ones, which raised its efficiency, customer satisfaction, seamless operations, as well as protect customers from fraud-related losses in the period.

While admitting that the bank earns foreign exchange besides Diaspora remittances through money transfer operators, he said the financial institution books were positively impacted by devaluation gains.

“We have quality foreign exchange expectations from our subsidiaries,” Nwaghodoh said, adding that sustainability of the gains is a function of what the exchange rate turns out in 2017.

Further breakdown of the bank’s financials showed that its interests’ earnings were more from investments in treasury bills and improved yields, as well as favourable pricing of loans.

It also gained from effective management of costs in operations, conservative credit risk approach, which shields it from bad debts, even as the bank admitted that its provisions for Non-Performing Loans (NPLs) impacted the level of profit.

“UBA continues to maintain superior asset quality metrics with Cost of Risk (CoR) ratio at 1.2 per cent and NPL ratio at 3.9 per cent. Loan to deposit settled at 58.9 per cent, while liquidity ratio closed at 40 per cent. Also, Capital Adequacy Ratio (CAR) is maintained at 20 per cent. These are well above the regulatory requirements,” he said.

Also, the bank’s Head of Investor Relations, Abiola Rasaq, explained that the bank’s strategy is to pursue a diversified credit portfolio across sectors, but not without limits to level of risk appetite.

Noting that while outlook remains positive with the current level of sound risk management framework and improved operating network across Africa, the bank is not resting on its oars in order to remain profitable.