Kayode Tokede examines United Bank for Africa Plc’s 2024 financial year performance and prospects for shareholders of the pan-African financial institution

United Bank for Africa (UBA) sustained a year round 2024 performance  as its income  from  core  banking operations drove   profit  and dividend  payout to  shareholders.
A review of  UBA’s  performance  since first quarter (Q1) ended March 2024 showed a  profit before tax of N156.34 billion, a significant increase of 155 per cent from N61.7 billion in Q1 2023, while profit after tax(PAT) jumped from N53.5 billion to N142.5 billion, representing an impressive rise of 165 per cent.
In the half year ended June, 2024, the lender announced profit before tax(PBT) of  N402 billion, while PAT stood at N316 billion in the year under consideration.

In third quarter (Q3) ended September 30, 2024, the management of UBA declared N603.48 billion PBT, representing an increase of 20.2 per cent from N502.09billion recorded at the end of the nine months of 2023, while PAT also rose remarkably by 16.9 per cent from N449.26 billion recorded a year earlier to N525.31 billion in the period under review.
However, despite the highly challenging global economic and business environment, UBA in its full year ended December 31, 2024 recorded a profit before tax of N803.72 billion representing a 6.1 percent increase from N757.68 billion recorded at the end of the 2023 financial year.

PAT stood at N766.57 billion, up by 26.14per cent from N607.7billion declared in  2023.   This translates to an Earning Per Share (EPS) of N21.73 in 2024, compared to N17.49 in 2023.
 As a result of the impressive performance and in fulfilment of the promise made by the UBA Group Chairman, Tony Elumelu, to shareholders at the last

annual general meeting (AGM) the bank proposed a final dividend of N3.00 kobo for every ordinary share of 50 kobo, for the financial year ended December 31, 2024. This brings the total dividend in the year to N5.00.
The Board of Directors of UBA had declared an interim dividend of N2.00 per share for every ordinary share of N0.50 each held by its shareholders in H1 2024, representing 300 per cent increase compared to the N0.50 declared in the similar period of 2023.
The 7.8 per cent dividend yield had ranked UBA as the highest among other listed financial institutions that have declared interim dividend payout to shareholders on the Exchange. UBA in 2023 financial year paid shareholders a final dividend of N2.30 per share (N0.90 per share in 2022).

The proposed final dividend of N2.30 per share and the N0.50 per share interim dividend paid in September 2023, brought the total dividend for the year to N2.80 in 2023 from N1.10 per share total dividend paid in the 2022 financial year.
It is  clear to  explain that the  growth in profit was  driven  by  a notable increase in revenue generation by the bank. According  to the details from the report, gross revenue expanded to N3.19 trillion in 2024, 53.56 per cent increase  when  compared  to N2.08trillion in 2023.

This was driven by improved performance across major income lines, including both interest income and non-interest income. Specifically, interest income expanded to N2.37trillion in 2024, up by by  120.40 per cent from  N1.08 trillion in 2023 .  The growth in  interest income  is  on the back of the high yield environment, which was prevalent in  2024, as policy makers jacked up rates to curb inflationary pressures.

This positively impacted asset  yield, translating to substantial increase in interest earned on loans and investment securities. Thus, interest income from loans and investment securities stood at N1.02trillion and N1.20trillion,  representing a 104.98 per cent and 137.05 per cen jump respectively, while interest on cash balance also  rose by 109.43per cent to N146.08billion in 2024.
Similarly, interest expense moved to N839.25bn in 2024, up by 128 per cent  from  N367.81billion in 2023  amid the  expansion of Current  Account and Savings Account (CASA) mix by 304basis to 88.52per cent.

This was mainly propelled by interest incurred on deposits from banks (+277.77per cent to N196.63billon), deposits from customers (+85.24per cent to N456.61billion) and borrowings (+169.86per cent to  N180.56billion).
Eventually, net  interest income amounted to N1.53 trillion, 116.35per cent higher than what was recorded in the same  period in 2023.
UBA’s  cost pressure was evident in the review period. This emanated  from impairment charges on financial instruments, which amounted to N216.97billion in 2024,  representing a 50.6  per cent increase from N144.05 billion reported in  2023,  amid the challenging macroeconomic conditions affecting loan repayments.

Elsewhere, operating expenses saw significant increase, coming in at   N1.06trillion in 2024 , up by 69.01 per cent from  N625.01 billion in 2023. Growth in operating expenses  was  driven by the inflationary pressures witnessed in 2024 as employee  benefits jumped to N314.66 billion, about 72.12 per cent when  compared to  N182.81billion in 2023
Like in the previous years, the Group’s total assets also increased significantly to N30.4 trillion,  about 46.8 per cent increase from N20.65 trillion in 2023, signifying a milestone leap for the bank with the largest spread across the continent.
From the 2024 balance sheet  position, the key drivers  to the  Group’s  total  assets was  N24.65 trillion total deposits  in 2024, up by 42.03 per cent from  N17.36 trillion in 2023 and N7.5 trillion net loans  in 2024,  about 42.03 per cent increase over  N5.55 trillion  reported in 2023.

Consequently, UBA Group shareholders’ funds rose from N2.030 trillion in 2023 to close the 2024 financial year at N3.419 trillion, achieving an impressive growth of 68.39 per cent.  .
Furthermore, UBA’s non-performing loans (NPL) stood at 5.58per  cent  in 2024 from 5.85 per cent in 2023,  while  NPL coverage ratio moved  from  77.55 per cent in 2023  from  80.85 per cent in 2024.

Conclusion
The Group Managing Director, UBA,  Oliver Alawuba   in  a statement  said: “UBA’s 2024 financial performance demonstrates our continued focus on driving earnings growth, preserving asset quality, expanding business operations and  deepening market share.
“Our continued investment in our highly diversified global network allows UBA to deliver  high quality, consistent earnings. Our businesses have been able to grow product and  service income and expand our deposit base, allowing the Group to increase earnings,  while maintaining strong spreads and margins.
“The Group made a profit before tax of N803.7billon, with total deposits increasing 42per cent from  N17.4 trillion at 2023 to N24.7 trillion. Total assets grew 47per cent to N30.3 trillion from N20.7  trillion reflecting broad-based growth across all core businesses. These results were   achieved despite prevailing macroeconomic challenges, geopolitical uncertainties,  and exchange rate volatilities.
“I am particularly pleased with the marked improvement in our core earnings profile, as  the profit is derived from high-quality income streams from funding intermediation, fees  and commissions. This reflects strong long-term, sustainable revenues generation  capacity.
“Our ex-Nigeria (Rest of Africa & International) operations have expanded significantly  over the past five years, now contributing 51.7per cent of Group revenue, up from 31per cent in 2019,  delivering diversification benefits and further boosting long-term shareholder value. This   will continue to grow, as we further explore strategic markets that align with our overall  vision.
“We are currently upgrading our business scope and authorization in France and considering other viable markets in the short to medium term.
“We remain committed to continuous investment in technology, data analytics, product  innovation, staff training and development, which collectively enhance our customers’  experience.”
Also commenting on the results, the Executive Director, Finance & Risk Management, Ugo Nwaghodoh, said: “UBA recorded triple digit growth in net interest income, resulting in remarkable  improvement in net interest margin from 6.83per cent in 2023 to 9.02per cent. Similarly, the Group  recorded strong double-digit growth in fee and commission income lines of 91.66per cent.
As we defensibly position the portfolio to navigate prevailing global and regional  macroeconomic upheavals, asset quality improved, with NPL ratio moderating to 5.58%,  with strong provision coverage at 81per cent.
“UBA Group continues to demonstrate strong capital levels, with shareholders’ funds growth of 68per cent to N3.42 trillion and a solid capital  adequacy ratio of 31per cent.
“As we navigate evolving risks, we remain focused on responsible growth, delivering  customer-focused value propositions, whilst ensuring compliance with regulatory  requirements in all jurisdictions.”