Stakeholders laud UBA Q2 PAT growth of 281% y/y

Shareholders of the United Bank for Africa (UBA) Plc have lauded the bank’s second quarter result for the period ended June 30, 2016 released to the Nigerian Stock Exchange last Friday. The bank recorded a 281 per cent growth in profit after tax.

The result which has triggered positive reaction from the investing community and upward review of the bank’s 2016 forecast, recorded a strong non-interest income growth and positive other comprehensive income and flat opex.
UBA is proposing an interim dividend of 20kobo, implying a yield of 4.5 per cent. The dividend FBNQuest, research analysts said “is flat y/y but is better than our 15kobo estimate. We rate UBA shares Outperform”
The bank’s second quarter result showed a robust N58.4billion earnings in other comprehensive income (OCI), boosted by forex translation gains and fair value gains. This buoyed profit after tax to a 281 per cent year on year (y/y) growth while PBT recorded 7 per cent growth y/y.
Analysts maintained that the PBT growth of 7 per cent may appear modest but it showed a strong performance hence the 2015 comparable period was also very impressive.
Just like other top tier banks, UBA’s non-interest income which grew by 46 per cent to N35.2 billion y/y was resilient and stronger of its two revenue lines. The net interest income stood at N29.7billion, a 12 per cent y/y drop. On a H1 basis, trading and fx income was up by around 8 per cent y/y.
FBNQest remark on the bank’s second report showed that the result came in stronger than expected and would further trigger further upward review of 2016 forecast. It noted that the market was probably expecting fx revaluation gains to be significant in UBA’s results, but “In contrast the bank booked an fx revaluation loss of –N4.2bn, but this was more than offset by fair value gains on derivatives (N15.9bn) and fx trading income of N5.8bn”.
UBA’s resilient overall performance in non-interest income of N35.2 billion overshadowed N5.8billion in loan loss provisions, taking into account, a net recovery of N126m a year ago. Operating expenses (Opex) for the period was flattish.
The bank’s NPL ratio is still below 3% though up from 1.7% in December, and the coverage ratio remains over 100%, though down from 143% in December. The positives on the non-interest income and OCI line far outweigh the negatives, including that of asset quality. UBA shares, year to date have gained 31.7 per cent, outperforming the market by 36 per.
Meanwhile, for the 20 kobo dividend for the period ended 30 June 2016, the register period of September 12th 2016 has been fixed, with payment date of 19th September 2016.