…UBA Interest income rose by 129.7% y/y to N440.76 billion driven mostly by the group’s investment income (+147.1% y/y).
MON MAY 06 2024-theGBJournal| United Bank for Africa (UBA) released its Q1-24 unaudited financials today, which showed that the Holdco recorded a significant 169.4% year-on-year growth in EPS to N3.96 in Q1-24 (vs Q1-23: N1.47).
The expansion in the UBA group’s EPS was underpinned by the remarkable expansion in funded income (+129.7% y/y), just as non-funded income (+38.9% y/y) also grew in Q1-24.
UBA Interest income rose by 129.7% y/y to N440.76 billion driven mostly by the group’s investment income (+147.1% y/y). In nominal terms, the group also earned higher interest from its loans and advances to customers (+103.3% y/y) and cash and bank balances (+267.2% y/y).
The growth across these income lines were induced by a combination of the rise in the group’s interest-earning assets (+71.6% YTD to N15.98 trillion) and higher yields in the fixed income market.
UBA recorded a 93.9% y/y growth in interest expense to N140.09 billion due to the higher cost incurred on deposits from customers (+71.1% y/y), deposits from financial institutions (+138.7% y/y) and borrowings (+149.2% y/y).
Analysts at Cordros Research attribute the higher interests paid on deposits from customers to the increase in customers’ deposits (+112.6% YTD to N18.38 trillion) amid an improvement in its CASA mix (Q1-24: 87.0% vs Q1-23: 84.0%).
Consequent to the faster pace of growth in interest income relative to interest expenses, the group recorded an expansion in net interest income (+151.3% y/y). Eventually, net interest income ex-LLE closed 164.1% y/y higher after taking account of the 53.4% y/y decline in the group’s impairment charges in Q1-24.
Further down, non-interest income advanced by 38.9% y/y to N77.91 billion, supported by good expansions in net fees and commission income (+114.6% y/y) and net FX trading income (+95.8% y/y). Consequently, operating income settled higher by 122.5% y/y to N373.31 billion.
Operating expenses in Q1-24 also notched higher by 104.1% y/y, triggered by expansions in employee benefits, regulatory costs and sticky inflationary pressures. For context, the group recorded higher costs from personnel expenses (+112.1% y/y), fuel, repairs and maintenance (+136.5% y/y), AMCON levy (+75.5% y/y) and NDIC premium (+111.4% y/y) during the period.
Despite this, the group’s operational efficiency improved as the cost-to-income ratio (ex-LLE) settled at 58.3% (Q1-23: 63.6%) on account of the faster expansion in operating income.
Meanwhile, profit-before-tax grew by 154.7% y/y to N156.34 billion. The group recorded a 166.1% y/y growth in profit-after-tax, amid the higher income tax expense (+76.8% y/y).
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