…net interest income ex-LLE closed higher at N614.41 billion (+394.8% y/y) after factoring the 60.9% y/y decline in the group’s impairment charges in H1-24.
…Profit before tax declined by 0.5% y/y to N401.58 billion. Eventually, the group’s profit after tax settled at N316.36 billion
…YTD, UBA is up +10.0%, compared to the NGX Banking index (+4.1%) and the broader All-Share index (+31.7%)
MON SEPT 30 2024-theGBJournal| United Bank for Africa (UBA) logged a jump in interest income by 134.3% y/y to N1 trillion in H1-2024, driven by gains recorded across all the major lines.
The group generated higher income from investment securities (+167.0% y/y to N510.21 billion), loans and advances to customers (+92.5% y/y to N343.76 billion), loans and advances to banks (+464.3% y/y to N101.67 billion), and cash and bank balances (+18.0% y/y to N47.92 billion).
Expectedly, the growth in these income lines was induced by a combination of the higher yield environment and the rise in the group’s interest-earning assets (+45.2% YTD to N23.79 trillion).
UBA recorded a 119.0% y/y growth in interest expense to N328.94 billion due to the higher cost incurred on deposits from customers (+106.7% y/y to N204.49 billion), borrowings (+161.1% y/y to N68.65 billion) and deposits from financial institutions (+142.7% y/y to N54.09 billion).
We attribute the higher expense incurred on deposits from customers to the increase in the bank’s deposits (+33.7% YTD to N23.21 trillion) despite a slight improvement in the group’s CASA mix (H1-24: 87.5% vs Q1-24: 87.0%).
Consequent to the faster growth in interest income than interest expenses, the group recorded a 142.6% y/y expansion in net interest income to N674.62 billion. Eventually, net interest income ex-LLE closed higher at N614.41 billion (+394.8% y/y) after factoring the 60.9% y/y decline in the group’s impairment charges in H1-24.
Non-interest income declined during the period by 49.1% y/y to N257.69 billion as the fair value loss on derivatives (N311.70 billion) compromised the gains from foreign exchange revaluation (+1,015.6% to N326.18 billion), net fees and commission income (+85.3% y/y to N145.10 billion), FX trading (+241.6% y/y to N51.81 billion), and investment securities (+25.3% y/y to N31.88 billion).
However, the stellar growth in interest income was sufficient to offset the decrease in non-interest income, causing operating income to rise by 38.4% y/y to N872.10 billion.
Further out, operating expenses closed higher by 107.9% y/y to N470.52 billion, triggered by the increasing regulatory costs and persistent inflationary pressures.
Precisely, the group incurred higher costs on personnel expenses (+92.9% y/y to N133.86 billion); AMCON levy (+71.9% y/y to N70.33 billion); fuel, repairs and maintenance (+218.7% y/y to N47.85 billion); and NDIC premium (+102.6% y/y to N23.51 billion) during the period.
Accordingly, the group’s operational efficiency deteriorated as the cost-to-income ratio (ex-LLE) settled at 54.0% (H1-23: 35.9%).
Overall, profit before tax declined by 0.5% y/y to N401.58 billion. Eventually, the group’s profit after tax settled at N316.36 billion (-16.4% y/y), amid the higher income tax expense (+235.3% y/y to N85.22 billion).
Meanwhile, the group an 18.7% y/y decline in EPS to N8.90 (H1-23: N10.95). The decrease in the group’s EPS is attributable to the lower non-core income (-43.1% y/y) recorded, undermining the growth in the group’s core (+134.3% y/y) income.
Notably, UBA is the only tier 1 bank to report a decline in EPS – ACCESSCORP (+103.5% y/y), FBNH (+94.7% y/y), GTCO (+223.1% y/y), and ZENITHBANK (+98.2% y/y).
Meanwhile, the Board proposed an interim dividend of N2/share (H1-23: N0.50/share), translating to a dividend yield of 7.8% based on the last closing price of N25.75/share (27 September).
YTD, UBA is up +10.0%, compared to the NGX Banking index (+4.1%) and the broader All-Share index (+31.7%).
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