United Bank for Africa (UBA) Plc in its 2016 audited accounts maintained an impressive growth in profitability and dividend, reaffirming the Banks position as one of the most profitable and well managed financial institutions in the country.Historically, the Bank crossed a N3.5 trillion mark in total assets while its total equity went up by 35 per cent to N448 billion.UBA sustained growth in gross earnings that impacted positively on its profit after tax, which rose by 22 per cent, despite the macro economy challenges; dwindling global oil prices, among others.The Bank released its audited results for the full year ended December 2016, showing a strong performance across most indicators on the back of sustained cost efficiency, effective risk management and improved profits.On the heels of the impressive profit, the UBA management also delights shareholders by paying dividend twice every year; a mid-year interim dividend and a final dividend at the end of the financial year.For the financial year ended December 2016, the Banks management proposed a total dividend per share (DPS) of N0.75 comprising of N0.20 interim dividend already paid in mid-2016 and a final dividend of N0.55 payable following shareholders endorsement at the Annual General Meeting.Demonstrating its prudent culture of risk asset creation and management, UBA maintained a conservative balance sheet with 3.9 per cent non-performing loan ratio and 20 per cent BASEL II capital adequacy ratio.From a single country operation founded in 1949 in Nigeria, UBA has emerged to a pan-African provider of banking and other financial services to 11 million customers globally, through one of the most diverse service channels in sub-Saharan Africa; 632 business offices, 1,750 Automated Teller Machines (ATMs), some 13,500 Point of Sales (PoS), and a robust online and mobile banking platform.Commenting on the results, the Banks Group Managing Director and Chief Executive Officer, Kennedy Uzoka, expressed satisfaction at the resilience of the Bank, despite the macroeconomic challenges in a number of countries where UBA operates. Given the operating environment in 2016, I am very pleased with our profitabilityan impressive 32% growth in profit before tax to N91 billionwhilst we have also focused keenly on operational efficiencies, illustrated by the reduction in our Cost-to-Income Ratio, he said.Speaking on its outlook for the 2017 financial year, Uzoka expressed optimism, as the Banks pan-African operations increasingly gain critical mass across its chosen markets. As we implement our Customer First Philosophy, we are approaching 2017 with real optimism, especially with the outlook remaining positive in many of our markets, where we benefit from our increasingly diverse revenue streams. We reiterate our pledge to delivering excellent service to our customers, and remain committed to creating superior and sustainable return for our shareholders.Sustained growth in NII despite tough operating environmentFor the full year ended December 2015, UBA reported a growth of 22 per cent in gross earnings to N384 in 2016 from N315 billion in the corresponding period of 2015.Interest income grew by 15 per cent to N263 billion from N229.6 billion in 2015; driven by a strong growth of 45 per cent in loan & advances to customers to N1.51 trillion in 2016 up from N1.04 trillion in 2015.Interest expenses rose by nearly three per cent to N98.8 billion in 2016 from N96 billion in 2015. The consistent high interest rate environment throughout the period and increase in the Banks Cash Reserve Ratio (CRR) and government implementation of the Treasury Single Account resulted in increase in competition of deposits amongst banks and hence increase in interest expenses.Consequently, the banks Net Interest Income (NII) grew significantly by 23.7 per cent from N133.6 billion in 2015 to N165.2 billion in 2016.UBA reported Net impairment loss on loans and receivables of N27.68 billion for the year ended 2016 from N5.05 billion in the corresponding period of 2015; driven by prudent provisioning by cleansing its books of assets with poor quality, thus paving the way for operational efficiency and improved earnings for the business years ahead.Impressive performance in profitabilityDespite higher operating expenses, UBA maintained a stronger operational efficiency in a tradition that the Bank is well known for.Fees and commission income gained 18.3 per cent from N61.89 billion to N73.2 billion in 2016 while Fee and commission expense moved from N8.6 billion to N13.99 billion recorded in 2016.However, this renowned efficiency was sustained in the 2016 financial year as the Group grew total operating expenses by 12per cent to N153 billion in 2016 up from N137 billion in 2015 while operating income increased by nearly 29 per cent to N271 billion.For the year, the Group delivered a significant 32 per cent growth in profit before tax to N91 billion compared to N68 billion recorded over the same period of 2015.In the same vein, UBAs profit after tax grew by 21 per cent to N72 billion, from N60 billion recorded the previous year.Furthermore, UBAs subsidiaries outside of Nigeria are increasingly gaining market share across the 18 African countries, thus reinforcing the strong and impressive subsidiary contribution to the Group, estimated at one-third of profit in 2016, from less than a quarter in 2015 financial year.UBA maintained its leading position in terms of margin and cost efficiency. The Banks value creation for its shareholders, recorded growth as Return on Average Equity relatively stable at 19 per cent.Resound growth in balance sheetsThe Groups balance sheet remained strong with 27 per cent growth in total assets, from N2.75trillion in 2015 to N3.50 trillion in the year under review.Net Loans moved to N1.51 trillion, a 45per cent YoY growth from N1.036 trillion, partly driven by Naira depreciation. Despite the implementation of the Treasury Single Account (TSA) by the federal government, customer deposits gained 19 per cent from N2.08 trillion in 2015 to N2.49trillion in 2016.This brings the groups total liabilities to N3.06 trillion in 2016, 26.3 per cent above N2.4 trillion recorded in 2015.Meanwhile, shareholders funds grew by 35 per cent to N448 billion in 2016 from N333 billion in 2015.Analysts reviewDespite the macro-economic challenges, alongside CBNs monetary tightening policy which constraints most banks income generation and resulting in high cost of funds within the financial system, UBA was able to outperform general expectation.The Bank acknowledged the challenging operating environment and it is cautiously optimistic that the current challenges will open up new opportunities in the near and medium term, and are appropriately positioning its business to take full advantage of emerging opportunities.In a statement, the Group Chief Finance Officer, Ugo Nwaghodoh said, Our performance in 2016 reflects the strong potential and resilience of our business. We grew top and bottom lines by 22per cent and 32 per cent respectively, despite the stagflation in Nigeria, our core market.Reflecting improved balance sheet management and better value extraction, our net interest margin (NIM) improved 40basis points YoY to 6.7per cent.Even as we prudently increased our collective impairment on performing loans to accommodate the weak fundamentals of the economy, our cost of risk remained relatively modest at 2.1per cent.We are also making remarkable progress towards our medium-term vision for our African subsidiaries (ex-Nigeria), which contributed a third of our profit, as we continue to leverage innovative offerings to grow our share of the respective markets. As we diligently execute our Customer First initiative, I am particularly upbeat on the future of our business and the value creation for shareholders, he said.
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