United Bank for Africa Plc (UBA) has announced its financial results for the third quarter of 2024, showcasing an extraordinary 101.88% year-on-year growth in pre-tax profits, which surged to N194 billion. This exceptional performance pushed the bank’s nine-month pre-tax profits to N603.48 billion, up from N502.09 billion in the same period last year.
Key Financial Highlights (2024 Q3 vs. 2023 Q3):
Gross earnings: N1.027 trillion (+213.97% YoY)
Interest income: N795.34 billion (+234.18% YoY)
Interest expense: N366.64 billion (+402.03% YoY)
Net interest income: N428.71 billion (+159.87% YoY)
Net fees and commission income: N88.76 billion (+146.61% YoY)
Net trading and foreign exchange income: N84.31 billion (+163.66% YoY)
Total non-interest income: N178.15 billion (+159.33% YoY)
Operating income: N606.85 billion (+159.71% YoY)
Net operating income after impairments: N543.59 billion (+123.71% YoY)
Profit after tax: N205.78 billion (+189.58% YoY)
Earnings per share: N5.78 (+197.94% YoY)
Loans and advances to customers: N7.675 trillion (+46.79%)
Cash and cash equivalents: N9.108 trillion (+50.07%)
Total assets: N31.801 trillion (+53.98%)
Customer deposits: N22.969 trillion (+54.24%)
Strong Performance Across Key Metrics
UBA’s remarkable growth trajectory is evident from both its top-line and bottom-line figures for Q3 2024. The bank’s gross earnings crossed the N1 trillion mark, a 213.97% increase year-on-year, driven largely by robust interest income. The growth in interest income, which made up 77% of gross earnings, was primarily attributed to significant earnings from investments in securities, and loans and advances to customers.
Interest income from loans and advances contributed 40.4% of total interest income in Q3, though this figure marked a 19% decline from last year. Despite this, interest income from investments in securities saw a boost, comprising 35% of interest income for the quarter. Combined with strong performance in the first half of 2024, the nine-month contribution from securities grew to 42%, illustrating UBA’s well-diversified interest income portfolio.
On the cost side, interest expenses also rose sharply by 402%, driven by rising interest costs on customer deposits, which represented 46% of total interest income in Q3. This underscores the increasing cost of funds, as UBA continues to compete for deposits in a tightening liquidity environment.
One area of concern for UBA was the FX market, with foreign exchange revaluation gains declining in Q3 compared to the previous year. The bank reported a foreign exchange loss of N74.82 billion during the quarter, reflecting volatility in the currency market.
Balance Sheet Expansion
UBA’s balance sheet remained solid, with total assets growing by 54% year-on-year to N31.801 trillion. The increase was driven by substantial growth in cash and cash equivalents, loans and advances, and investments in securities. Loans and advances to customers grew by an impressive 47% to N7.675 trillion, far surpassing the bank’s 2024 loan growth target of 20%, reflecting strong demand from both retail and corporate clients.
Customer deposits also saw significant growth, rising by 54% year-on-year to N22.969 trillion. This growth rate exceeded the bank’s 2024 deposit growth target of 20%, following a remarkable 93% growth in deposits recorded in 2023. The increase in customer deposits reflects UBA’s successful efforts in attracting and retaining customers, providing the bank with a cost-effective funding base that supports its lending activities and overall balance sheet expansion.
Strategic Outlook and Operational Efficiency
Commenting on the bank’s performance, UBA’s Executive Director of Finance & Risk Management, Ugo Nwaghodoh, expressed satisfaction with the results. He highlighted the bank’s efforts in improving operational efficiency, with the cost-to-income ratio stabilizing around the 50% mark.
“I am delighted at the milestone reached in driving operational efficiency, reflected in the cost-to-income ratio normalizing around the 50% range. We remain on track with various strategies to optimize our cost of funds and operating expenses,” Nwaghodoh said.
UBA’s impressive Q3 2024 performance, characterized by strong profit growth and balance sheet expansion, demonstrates the bank’s ability to navigate the challenges of a volatile economic environment. With continued focus on operational efficiency and strategic investments in key growth areas, UBA is well-positioned to maintain its upward trajectory, delivering value to shareholders and stakeholders alike. The bank’s management remains confident in its ability to sustain its performance through the end of the year, despite ongoing challenges in the FX market and rising interest expenses.
