The United Bank for Africa has caved in to the forces of covid 19 and economic headwinds as its profit after tax for the half year period 2020 slumped 23 percent to N44.3 billions from N57billion in the corresponding period of 2019.
The belated half year result released yesterday also indicated its profit before tax nosedived 19 percent from N70billion in June 2019 to N57billion in the first half of 2020 .However,the bank registered a marginal increase of 0.3 percent in its interest income,the core banking business, moving from N205 billion in 2019 to N206 billion in 2020.
Also ,its net assets jumped 6 percent to hit N635 billion in 2020 to N598 billion in 2019 half year result. The above development impacted negatively on its earnings per share drawing back to N1.24k from N1.62 k during the period under review. Earnings per share indicates profit due to each shareholder or profit attributable to each equity share within the period under review.
The above unimpressive performance could be attributed to a 150.22% leap in impairment charge for credit losses on financial assets from N3.12bn in the corresponding period of 2019, to N7.807bn. Also the bank’s skyrocketing employees benefit expenses which jumped to N7.387bn or 19.86% and the N14.374bn or 22.6% increase in other operating expenseswhich the bank failed to control were the sources of the heavy drop .This has led to the bank planto pay a leaner dividend of 17 kobo per share for the period, compared to 20 kobo the directors have traditionally paid, since UBA started paying interim dividend.
According to details of the audited result, gross earnings rose to N301.11bn from N294.032bn, with interest income rising marginally from N204.885bn in 2019, to N205.586bn. A breakdown showed that UBA Group earned N189.608bn from its Nigerian operations; followed by N107.556bn from its African operations; and N9.219bn from the “rest of the world.”
The management successfully reduced interest expenses by a slight N8.5bn or 8.97% from N94.762bn to N86.262bn, with its Nigerian arm accounting for N62.475bn; and N25.124bn from the rest of Africa. This resulted in net interest income of N119.324bn, up from the previous N110.123bn. Impairment charge for credit losses on financial assets rose from N3.12bn to N7.807bn, with all of N7.019bn from Nigeria; resulting in net interest after impairment of N11.517bn, as against N107.003bn in the 2019 half-year.
Fees and commission income improved marginally from N52.344bn to N55.868bn; fees and commission expenses stood at N17.286bn, compared to N16.289bn in the prior half-year. Net fee and commission income climbed marginally from N36.055bn to N38.582bn.
Net trading and foreign exchange income improved from N32.746bn to N35.208bn; other operating income recorded flat growth from N3.715bn to N3.595bn; employee benefit expenses grew from N37.178bn to N44.565bn; even as depreciation and amortisation inched from N8.812bn to N9.59bn.
Other operating expenses rose from N63.597bn to N77.971bn; while profit before tax sank by N13.145bn or 18.71% from N70.274bn to N57.129bn. Income tax expense dropped from N13.535bn to N12.698bn, following which net profit stood at N44.431bn, which translating to Earnings Per Share of N1.24, from N56.739bn or N1.62 recorded in the preceding half-year.
PBT was driven significantly by the N35.995bn from the African business, which was almost double the N19.772bn reported by Nigeria; while the income expenses of N1.079bn and N4.005bn respectively left net profit by UBA Africa and Nigeria at N31.99bn and N18.693bn.
Total comprehensive income for the period amounted to N64.115bn, as against the previous N62.08bn.
On the balance sheet, total assets improved by N1.171tr or 20.9% from N5.604tr at the end of December 2019 to N6.775tr on June 30, 2020; with cash and bank balances soaring from N1.396tr to N2.138tr; followed by the growth customer loans and advance from N2.061tr to N2.186tr.
Total liabilities climbed from N5.006tr in 2019 to N6.14tr; lifted by customer deposits of N4.8tr, compared to N3.832tr; resulting in shareholders’ equity of N609.844bn from N578.573bn