Q3, 2023: UBA leads the pack with biggest profit


With a game changer from non-interest income, UBA sustains the momentum from its second quarters, beats its closest rivals to gain leadership in profitability.  

The financial year 2023 promises to be the best year for the United Bank Africa, a bank with a vision of attaining the status of African biggest brand with virtually all its performance indicators pointed sharply northward indicating a powerful turnaround for the African global bank; its results in the current year had dabbed off any doubt over its resolve to lead the pack in terms of profitability. Its profit after tax skyrocketed by 287.2% in the third quarter of 2023 to hit N449.30b from N116b in the corresponding period of 2022 


The indication of this is that UBA has, for the first time in the recent time, overtaken Zenith Bank which had dominated and led that industry with the biggest profit after tax as it recorded N434 b at the end of third quarter of 2023 to stay behind UBA.

 The foundation for the latest brilliant performance was laid earlier in the first half of the current financial year when its profit after tax moved swiftly upward to N378.24b from N70.34b, an increase of 437.8 percent 

The above scenario is leaving glimpses of what is possible within this bank at the end of the current financial year and has continued   to raise the investors and the financial world’s level of expectations concerning UBA’s   full year results for 2023.

The bank is not likely disappoint   going by the impressive fundamentals. It did not only overtake its closest rivals in terms absolute profitability figure but in terms of cost efficiencies.  Analysts believed   the management of costs by its leadership is the key strategic capability driving its current exploit. UBA, indeed, deployed some core competencies on its resources to achieve better values for money in the period under review.

The above sterling performance could be pinned down to its improved strategic capability by which it demystified inclement macroeconomic environment and expanded its profit exponentially to lead the pack in the third quarter of 2023 UBA, Nigeria’s biggest bank by profitability, had gross earnings in the third quarter of 2023 expanded by 115.2% and wrenched up bottom line with a deft application of management’s experience beginning from leveraging net interest income

By hauling  up net interest income by 56.8 percent to N443.08billion from N282.51billion,  UBA displayed its capability to  gain better  spread or the difference between the rates at which the funds are borrowed and the rate at which they are invested or loaned out .Within this period , it took the bank N33.50k to get N100  interest earned income compared to N35 in the second quarter., while its interest expenses increased by 88% in the second quarter of 2023 compared to  the corresponding period in 2022 , in the third quarter of 2023  it increased by 62%  

Not only that. The volume of loan deployed helped in no small way to boost its interest income. The bank’s Net loans jacked up heavily by 47.2% to N5.07trillion from N3.44 trillion, led to a 58.6% increase in its interest income at N666.29b from N420.23b

The above strategic move was hinged on its increased in total assets and critical position of loan to its profitability. During the period under review, its total assets grew by 49.5 percent inching up to N16.24trillion from N 10.86trillion. 

A puffy assets level could indicate improved strengths in mopping up transactions, including a better position in maturity transformation- the stuff banks are best suited for. It can also mean that the bank has applied some elastic to its wings in the form of more customer touch points, branches and Point of Sale devices. For UBA, it was all of these and more.

 More importantly , Loan is the highest earning asset in the balance sheet , contributing  materially to the achievement and fulfilment of the objectives  of profitability by providing higher return  than other financial assets ; moreover, it helps the bank management to satisfy the legal and regulatory objectives of the monetary authorities , a key element in the creation and maintenance of depositor relationships ,particularly with the business firms  and  a vehicle through which management attempts to satisfy the credit needs  of the community or the credit markets the bank serves or intends to serve 

However, despite the above inspiring performance, the core banking segment posed a dangerous threat to the bottom line with Net impairment charge on loans and receivables rising by 964.4% to hit N144.62b from N13.59b.   

But UBA received its deliverance from this potential spoiler as its Non-interest income grew by 335.6% to N574.54b from N131.88b. Specifically, its Net trading and foreign exchange income skyrocketed by 1,072% to N450.25b from N38.41b  

Two stakeholders, its investors and the management are the palpable beneficiaries of this feat.  While its investors benefited from its cost efficiencies in terms of higher and better value for money at the same cost as indicated above, the bank enjoyed better competitive advantage as its cost base became the basis for achieving competitive advantage 

The feat is reflected in its key efficiency and profitability ratios. One of these is its Cost-to-income ratio which is the measure of the costs of running a company in relation to its operating income. The higher the ratio, the greater the risk of zero profitability. As a result of the significant improvement in efficiency, the bank’s cost-to-income ratio fell by -54.3 percent to   28.9% at the end of second quarter 2023 from 63.2% in the corresponding period of 2022. Though it rose by 42.4% to 36.44%   when compared with 63.21% in the corresponding period of 2023 third quarter, this is one the best any player has attained in the recent time.

 It is not the absolute profitability figure that matters but how resourceful a player is that is more important to the investors .One ratio that exposes this is the  Net interest margin (NIM) ,  a measurement comparing the net interest income a financial firm generates from credit products like loans and mortgages, with the outgoing interest it pays holders of savings accounts and certificates of deposit  .In the second half of  2023 its Net Interest Margin (NIM) rose by 8.4%  to  5.99% from 5.53% ; in the third quarter it hit 6.19%

 Also, its Earnings per share that is calculated as a company’s profit divided by the total outstanding shares of its common stock, an indicator of a company’s profitability skyrocketed to N12.93k from N3.27k, an increase of 295.0%. This ratio is a  good way to determine earnings to the investor   and is the monetary share value, i.e., what every share issued by the bank will receive from declared earnings. The higher the EPS, the more profitable the bank is.

To cement its place as the most profitable bank, return on equity (ROE), and return on assets (ROA), improved to 44.37per cent and 4.42per cent in 2023 from 19.72 per cent and 1.76 per cent respectively in 2022, indicating the bank   is able to generate greater profit from every naira of its assets and equity than before; by this its management is becoming more efficient and resourceful 

 With the highly inspiring rise in bottom line figures, marginal returns looked up sharply 

Operating profit margin   improved impressively as it moved up from 68 percent to 77.8 percent. Net profit margin rose to   34.3percent from 19 percent. Its feet footed of net profit margin countered the current skyrocketing inflation rate in 2023, it represents a 10 percent gain to investors over inflation

The brilliant performance of UBA in this current financial year with improved fundamentals has given it a better competitive muscles to dramatically increase its market value and overtake its rivals as it becomes the toast the stock investors.

With data updated as at November 4, 2023 and last price of N20.45k this bank’s market capitalization stands at N699.4b to stay just behind Zenith Bank and Guaranty Trust Bank. At this price per share, its shareholder returns within 7days gains 6% and 192% in one year to exceed both its industry and market averages. UBA exceeded the Nigerian Banks industry which returned 89.9% over the past year and the market which returned 66.3% over the past year.

 United Bank for Africa began the year with a share price of 7.60 NGN and has since gained 169% on that price valuation, ranking it 23rd on the NGX in terms of year-to-date performance. Shareholders can be optimistic about UBA knowing the stock has accrued 19% over the past four-week period—12th best on NGX.

UBA stock has turned its investors millionaire overnight with its 52 Week High at ₦21.95 compared with its 52 Week Low at ₦6.95 delivering 216% gain per share.

The bank’s stock potentials still remain enormous with its current fundamentals particularly with price earnings ratio 1.4x and price to book ratio 0.4x signaling the stock is cheaper relative to its peers and the market averages.



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