January - March 2016 •
The Lion King
• 11
WHY UBA IS A GOOD STOCK TO “BUY” NOW
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BUSINESS
achieved notwithstanding the chal-
lenging business environment.
He said that it is due to UBA’s resilient
business model, geographic diversifi-
cation, proactive strategies and strong
governance that gave it the perfor-
mance edge in 2015. He assured that
UBA will continue to invest in the future
whilst managing cost tightly to gener-
ate strong returns to shareholders.
But breaking down the bank’s per-
formance Oduoza noted that UBA
“recorded a decent 10% year-on-year
growth in gross earnings, driven pri-
marily by balance sheet optimization.
With a disciplined approach to cost
management, we achieved a tighter
cost-to-income ratio of 67% and pre-
served earnings growth for our share-
holders. Overall, we grew profit before
tax by 22% to an historic record of
N68.5 billion. More importantly, we
closed the year with a 25% year-on-
year growth in profit after tax to N59.7
billion; impressive performance which
translates to 20% return on average
equity.”
Following the impressive performance,
the board of UBA proposed that a
dividend of 40 kobo per share be paid
to shareholders which brought total
dividend paid for the 2015 financial
year to 60 kobo per share. UBA had
earlier paid an interim dividend of 20
kobo per share.
“Our 2015 profit is a new record and
I am pleased that our performance is
beginning to reflect the hard work and
discipline of our Board, Management
and Staff in creating superior value
for our stakeholders. We remain com-
mitted to growing in a responsible
manner that aligns with our vision of
building an enduring institution” said
Oduoza.
Explaining the significant improve-
ment in the bank’s performance, the
Group Chief Financial Officer (CFO),
Ugo Nwaghodoh said the bank lev-
eraged efficiency gains in business
development and operations to grow
earnings.
“We improved on our balance sheet
management and pricing, thus ensur-
ing a strong 19% growth in interest
income as well as an enhanced net
interest margin of 6.3%. Our improved
service delivery and customized offer-
ings helped in growing transaction
banking volume, with attendant fee
income” Nwaghodoh said.
But what may interest future investors
more is the increasing contribution of
the bank’s African subsidiaries to the
banks earnings.
“I am particularly excited by the per-
formance of our business in Africa
(ex-Nigeria), as we further our synergy
extraction and pursuit of scale eco-
nomics to achieve market share and
earnings targets. Precisely, UBA Africa
contributed 24% of our Group’s profit
before tax in the 2015, despite the
impact of cross-currency depreciation
in some of our markets.”
Nwaghodoh also disclosed that man-
agement’s “prudence and discipline
in risk asset creation over the past
half-decade sustained the quality of
our loan portfolio; NPL ratio stabilized
at 1.7% with full provisions coverage.”
The bank closed the 2015 financial
year with a total assets base of N2.75
trillion, deposits of N2.08 trillion, a loan
book of N1.04 trillion and Shareholder
funds of N333 billion which was 25%
higher when compared with N264 bil-
lion in 2014.
Recently, financial analysts at Nigeria’s
top securities firm, Afrinvest recom-
mended UBA as one of the top stocks
to buy in 2016 citing its “rich return on
equity, lower cost profile and relatively
healthier balance sheet, as positive
driver of earnings and sentiment.”
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