July - September 2017 •
The Lion King
• 9
Business
UBA Group declares
N0.20/share interim dividend
Following the audit of its 2017 half year results, the Board of UBA Plc, declared a N0.20 per share interim dividend.
To get details of this Board declaration and its implication, we had a chat with
Abiola Rasaq,
Head, Investor Relations,
UBA Group.
What is the significance of this interim dividend? Is post-
audit of the financial results a regulatory requirement?
Dividend proposal or declaration is not a regulatory require-
ment, rather a discretion of the Board. The declaration of
this year’s interim dividend reflects the commitment and
consistency of the Management and Board of UBA Plc
in delivering return to shareholders. Whilst the Board of
Directors of Banks in Nigeria, by regulation, can only pro-
pose or declare dividend from an audited earnings, it is not
mandatory to declare dividends on audited results.
Who are those qualified for this dividend and when will it be
paid?
Every shareholder, who has equity interest in the Bank as at
close of business on Wednesday, August 30, 2017, is entitled
to the dividend, as this is the qualification for the dividend.
The shareholders will get N0.20 for every ordinary share of
N0.50 being held as of this date, even if a shareholder has
sold some or all of its shares after the qualification date. The
payment will be made on Monday, September 11, 2017.
Shareholders who have subscribed to the e-dividend will get
payment alert through their bank on Monday, September
11, whilst dividend warrants will be dispatched to other
shareholders, who are yet to subscribe to the e-dividend.
Why N0.20 per share, despite the strong growth in EPS? A
total dividend of N0.75/share from the 2016 financial year
profit was paid?
The interim dividend is just a tip of the iceberg, aimed at
providing some income to shareholders ahead of the final
dividend, which better reflects the profitability of the Bank.
The decision to pay N0.20 aligns with recent year practice.
Like you rightly noted, the Bank paid N0.20 per share interim
dividend and N0.55 per share final dividend, totaling N0.75
per share dividend paid in respect of the 2016 financial
year.
Does this mean that UBA shareholders earn N0.20 on every
N0.50 investment they have made in the Bank?
The nominal value of each ordinary share of UBA is N0.50.
However, the shares are trading at premium of N9.05 on
the floor of the Nigerian Stock Exchange. Irrespective of
the time and price a shareholder bought the shares of the
Bank, every shareholder earns an interim dividend of N0.20
on every ordinary share being held as at the qualification
date. More importantly, dividend payment is just a part
of the return that shareholders earn on their investment.
Notably, year-to-date, UBA shareholders have earned over
100% capital gain on their investment, in the form of capital
appreciation on the price of the shares on the floor of the
Nigerian Stock Exchange. Thus, dividend is only comple-
mentary to the capital appreciation on the share price,
especially as capital gain forms the major part of an inves-
tors’ return on equity investments.
Can this return profile on UBA investment be sustained in the
long-run?
The return profile is sustainable, both from a perspective of
dividend and capital appreciation. As the Bank continues
to gain market share and grow its earnings across all busi-
ness lines, there is scope for dividend growth. In addition,
there is increasing investor confidence in UBA, as reflected
in the year-to-date performance of the share price and
notable oversubscription of the Bank’s debut Eurobond.
More so, the share price remains undervalued at current
price, which is a discount to book value just as the 0.7x
price-to-book valuation is a discount to emerging market
peer banks’ valuation of 1.5x.
