…As total assets cross the N8trn mark
March 13 (THEWILL) – The subsidiaries of United Bank for Africa (UBA) Plc – the offshore operating segments of the African World Bank – have collectively generated over $1 trillion in revenue in five years (2017-2021), according to data from the bank annual reports. The result, which reflects a continued trend in the upward performance trajectory, revealed that the bank achieved revenue of N976.63 billion in its African operating segments, excluding Nigeria. , while N88.32 billion came from offshore locations in the rest of the world. This brings the total subsidiary turnover to N1.1 trillion over the 5-year period.
Cumulatively, the subsidiary component represents 38.8% of the lender’s overall revenue of N2.8 trillion naira for the reporting period. Further analysis of data extracted from the financial services company’s annual reports showed that the total turnover of subsidiaries increased from N163.35 billion in 2017 to N300 billion in 2021, reflecting a growth of 55%.
Specifically, in 2017, the subsidiaries recorded a total turnover of N163.34 billion, which increased to N166.15 billion or 1.73% in 2018; it further climbed to 184 billion naira, reflecting a 10.74% increase in 2019. Despite the challenges of COVID-19, the total turnover of subsidiaries increased by 36.85% to reach 251.8 billion naira in 2020 compared to 184 billion naira in 2019. For the financial year 2021, the segments consolidated a total revenue of 300 billion naira, which represents a jump of 20% compared to what had been made the previous year.
On the profit side, the total profit before tax (PBT) of subsidiaries, which registered only 54 billion naira in 2017, soared to 105.4 billion naira in 2021, representing a growth of 95%. Trending on the same growth trajectory, Total Profit After Tax (PAT) for 2021 was N75.35 billion compared to N40 billion in 2017, reflecting growth of 88.25%. Furthermore, the total PAT of N266.5 billion generated by the subsidiaries during the 5-year period represented 54.34% of the total of N473 billion for the period.
The bank’s loans and advances, a core component of the balance sheet, have seen considerable growth in both fiscal 2021 and the 5-year review period. For the first time, the lender’s total assets crossed the 8 trillion mark to reach 8.54 trillion naira in 2021 from 7.7 trillion naira the previous year, an increase of 11%. For the 5-year period, UBA’s total assets grew from 4.1 trillion naira in 2017 to 8.54 trillion naira in 2021, a significant growth of 108.3%.
Explaining the importance of a strong asset base, Muhammad Mainoma, professor of finance and accounting at Nasarawa State University, Keffi, said it reflected the company’s ability to act strategically. . According to Mainoma, business leaders will continue to study the environment and take the opportunity to invest in areas that are prospering.
“For a bank, there is no period when people will not need money. So, once a company focuses and invests in areas that people always need, you won’t lose anything. This explains the continued growth despite difficult circumstances over the past five years,” the outgoing President of the Association of National Accountants of Nigeria (ANAN) told THEWILL.
Commenting on which factor contributed most to the impressive performance of the subsidiaries – the quality of the bank’s corporate governance or the operating environment, Mr. Sam Ndata, Chief Dealer/COO at Hedge Securities and Investment Co. Ltd, attributed the results more to overall corporate governance which affects his hierarchy.
“If the subsidiaries are doing well, it’s because their parent company is doing really well because the child appreciates the good things that come from the parents,” added the dean of stockbrokers in a philosophical note.
UBA had announced an impressive performance in key financial metrics in its 2021 annual report for the period ended December 31, 2021. The tier 1 bank said in its audited results submitted to the Nigerian Stock Exchange that its profit before tax (PBT) increased by 20.3 percent to 153.1 billion naira from 127.3 billion naira at the end of the previous year. Similarly, Profit After Tax (PAT) increased by 8.7% to N118.7 billion in 2021 from N109.2 billion recorded in 2020.
The bank had also explained that the impressive result had been achieved in the context of enormous commercial difficulties and slow economic recovery in most of the countries of its operations (subsidiaries).
The lender’s gross revenue increased significantly to N660.2 billion, an increase of 7% from the N616.8 billion recorded at the end of fiscal 2020. Total assets also followed the growth trajectory, reaching an unprecedented increase of N8.5 trillion or 11% for the year under review, from N7.7 trillion in 2020.
This is the first time the bank’s assets will cross the 8 trillion naira mark, indicating sound management decisions in resource management and an aggressive pursuit of customer deposits.
The report showed that net lending increased by 7.7% to N2.8 trillion, while customer deposits increased by 12.2% to N6.4 trillion from N5.7 trillion. during the corresponding period of 2020.
Commenting on the result, Group Managing Director/CEO Kennedy Uzoka said that despite the tough and challenging operating environment, UBA continues to deliver significant performance,
He said: “The year 2021 can best be described as a year of global recovery; economies around the world have started to see early recoveries as supply chains recover from the devastating disruptions suffered in 2020.”
“As a result, UBA recorded a remarkable 7% growth in revenue to 660 billion naira ($1.56 billion) and profit before tax (PBT) of 153.1 billion naira, up 20.3% compared to the previous year. Net loans and advances rose 7.7% to N2.8 trillion, with exposure mainly to resilient economic sectors including oil and gas, agriculture and manufacturing. Customer deposits increased by 12.2%, crossing the 6 trillion naira mark, to reach 6.4 trillion naira. »
The GMD explained that the quality of UBA’s portfolio, as well as the strength of the bank’s credit risk management frameworks and policies, remain the foundation of the positive results the bank has recorded over the years, adding that the current performance highlights UBA’s relentless customer focus and leveraging its key strategic levers – people, process and technology.
“Looking ahead, I am particularly excited about our ongoing business transformation program, designed to improve the bank’s process agility, service delivery and customer experience. We are also making significant investments in advanced technology and cybersecurity, to keep our innovative digital banking offerings above the curve, as we equip and revamp our human resources to compete and win in a rapidly changing landscape. . This will ensure that the bank continues to achieve respectable revenue and earnings growth over the medium to long term,” the GMD said.
UBA Group Chief Financial Officer Ugo Nwaghodoh, who corroborated the GMD’s comments, said, once again, that the bank has shown resilience. It achieved significant growth and strengthened its balance sheet despite the slow economic recovery that characterized 2021.
Through active and diligent asset and liability management, the bank was able to protect its net interest margin and reduced the cost of funds (CoF) by 70 basis points to 2.2% from 2.9 % the previous year.
According to him, the group’s capital adequacy ratio at 24.9% was well above the regulatory minimum required and reflects a strong capacity for business growth. “The Group’s non-performing loan ratio further improved to 3.6% from 4.7% at the end of 2020. This is a testament to the quality of UBA’s loan portfolio, although the bank remains relentless in its determination to reduce the cost to revenue ratio, which stood at 63.0% at the end of the year.
Nwaghodoh added that the bank has made further progress in growing its business and capturing market share across its pan-African operations, with the region accounting for 63.2% of the group’s profitability, up from 55.4%. % in 2020; Loans and advances as well as deposits in the region also increased by 14.5% and 27.3%, respectively, compared to the previous year.
UBA has a broad presence across the globe, operating in 20 African countries, with banking operations in the UK and the US. It has a representative office in Paris, France and has obtained a license to operate in Dubai, United Arab Emirates.