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10 | The Lion King
Ask the Executive
bills than lending?
That may be true at the moment,
but it is not always the case. Loans
typically command higher interest
rates than government securities.
However, due to impairments
and credit write-offs arising from
customer default, some institu-
tions find it more profitable to
invest in government securities,
as the probability of default, on
the latter, is perceived to be less.
Indeed in finance parlance, riskier
investments are expected to give
higher returns, “ceteris paribus”
i.e. all other factors held constant.
However, sometimes you want to
invest more in government bonds
and treasury bills because interest
rates on them are reasonably high
and there are not many custom-
ers available to lend to, who meet
UBA group lending criteria.
Nevertheless, a bank will always
have to strike a balance between
how much government securi-
ties it wants to hold and loans it is
able to grant, because it will rely
on loans granted to these same
customers and their non-lending
transactions for profit, in times of
low yield on government securi-
ties.
UBA has had a profitable 2012
financial year. What antecedents
led to the impressive performance
observed by the Group in FY12?
UBA has always been a profitable
bank. The lower-than-expected
financial performance in the past
financial year resulted from man-
agement’s deliberate effort to
clean up the balance sheet and
reposition the institution for greater
performance in future. The out-
come of this decision is the finan-
cial result you have seen in 2012,
as the underlying business has
always been profitable. The bank
has benefited from a conscious
effort to re-price loans as well as
improved transaction revenues.
We also saw improved contribu-
tion in 2012 from our operations
in a number of the other African
subsidiaries, as a number of them
consolidated their businesses and
share of their markets.
In the words of our GMD, “given
the abundance of talents in the
Bank, we have what it takes to
finish the year strong.” How would
you rate staff contribution to the
Group bottom line?
The banking business is all about
people! Whatever level of profit
we deliver this year can all be
rightfully attributed to staff contri-
bution. Having said that, I believe
there is still room for improvement,
because the financial perfor-
mance of UBA is yet to fully reflect
the depth and quality of our peo-
ple. I would like to admonish staff
to give their best and the bank will
deliver much better results, leaving
a bigger pie for all stakeholders to
share.
In terms of performance and
rewarding shareholders, where do
you think UBA will be in the next
five years?
Our bank has a track record of
rewarding shareholders. We lived
up to this billing by giving bonus
shares in 2011, when the bank
reported a loss. We will not relent
in rewarding shareholders for stay-
ing steadfast in their confidence in
the bank. Over the next five years,
we would have delivered one of
the best returns to shareholders,
both in terms of dividend yields
and capital appreciation. I say this
because the market price of our
shares is very low now and in line
with our expectations, analysts’
estimates suggest huge potential
capital appreciation. Again, as we
grow in profitability, shareholders
will be paid more dividends. We
expect discerning investors to buy
more UBA shares as the upside is
huge.
Given the challenging demands of
your role as Group Chief Finance
Officer, what do you do to unwind
from a hectic day?
Everyday? Unfortunately I don’t
have the luxury of time to really
unwind, everyday. However, I play
with my kids and listen to stories
about everything that happened
during the day, if I am fortunate to
meet them awake when I return
from work, and I also listen to some
music.
Generally, I use the gym (though
not regularly), and I do selectively
hang out with my friends; have
drinks and crack jokes. I am a
member of the golf section of Ikoyi
club and I also play tennis occa-
sionally.
What is your comment on the
future of the Nigerian banking
industry?
I see a very bright future ahead
for the Nigerian banking industry.
Having significantly de-risked the
balance sheets, strengthened risk
management and governance
structures, the industry is well po-
sitioned for healthy growth. The
landscape will get even more
competitive as the industry con-
solidates further and new entrants
come into the space. The Central
Bank has granted a few fresh
national banking licenses to some
local banks, while a number of
foreign banks are seeking to make
an inroad into the industry through
acquisitions.
I believe there is enormous ca-
pacity for growth in the industry.
According to Enhancing Financial
Innovation and Access (EFInA);
a financial sector development
organization that promotes finan-
cial inclusion in Nigeria, the total
number of banked customers in
Nigeria is currently 30 million, out of
a total population in excess of 150
million, and 18.1% higher than the
25.4 million people banked two
years ago. There is room for further
growth, as the Central Bank, Efina
and other institutions are pushing
for more financial inclusion and
are providing various avenues for
the un-banked populace to ac-
cess the formal banking sector.
I also expect to see significant
growth in electronic and conve-
nience banking products and ser-
vices, as customers migrate from
the use of traditional “brick and
mortar” branches to exploiting
electronic channels like Point of
Sales (PoS) terminals, Automated
Teller Machines (ATMs), internet
banking, electronic transfers rather
than cheques, etc. The CBN is
already driving this through the
cashlite initiative and banks are al-
ready making massive investments
in this regard.
With the expected intense com-
petition, only the banks that do
business in a sustainable manner,
with strong risk management prin-
ciples and corporate governance
practices will survive in the long
run. For us, our play across Africa
enables us diversify our earnings
base and risks to competition.
Therefore, I am confident that we
have some competitive edge over
our peers in this regard.