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UBA: Outperforming

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7 years ago

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United Bank for Africa (UBA) Plc is on the top list of companies with well-rounded performance. UBA’s top-of-the-chart performance at the stock market combines with considerable growth in all key fundamental indicators to make the bank the best performing banking stock in recent period. Capital Market Editor Taofik Salako, in this report, reviews the interplay of fundamental earnings and share price appreciation

United Bank for Africa (UBA) Plc outperformed all banking stocks in the first quarter of 2017 with a share price appreciation of 28.22 per cent. It had recorded the second highest price gain of 33.1 per cent in 2016, just slightly under three points behind Guaranty Trust Bank (GTB), which led the sector with 35.9 per cent.

Altogether, UBA’s share price had grown by more than 60 per cent in the past 15 months, the highest by any bank and one of the few bright spots in the long-running depression at the stock market. Average return at the Nigerian Stock Exchange (NSE) in the first quarter of 2017 was negative at -5.05 per cent.

The NSE Banking Index was down by 0.03 per cent while the NSE 30 Index, which tracks large-cap stocks, was almost on the average with a three-month return of -4.93 per cent. In  2016, the stock market had recorded a full-year average return of -6.17 per cent, equivalent to net capital loss of N604 billion.

Only 19 companies, including three banks, recorded a capital gain of 20 per cent and above in 2016, underlining the general downtrend that marked price changes during the period. A long-running depression had seen quoted equities losing N4 trillion in the past three years, including N1.75 trillion and N1.63 trillion in 2014 and 2015 respectively.

UBA’s share price appears to be riding on the crest of positive analysts’ reviews. There is almost analysts’ consensus on the attractiveness of the UBA. Investment research and rating firms such as Renaissance Capital, CSL Stockbrokers, Fitch and Augusto among others had maintained that UBA has strong fundamentals to support substantial price appreciation. UBA Group’s audited report and accounts for the year ended December 31, 2016 supported the positive view of its earnings potential, in spite of the Nigerian economic recession.

Improving earnings

Key extracts of the Group’s audited report showed impressive growths in the top-line and the bottom-line as it continued to expand its assets base. Group;s gross earnings rose by 21.9 per cent from N314.84 billion in 2015 to N383.65 billion in 2016. Interest income had grown by 15 per cent from N229.63 billion in 2015 to N263.97 billion.

With 2.9 per cent increase in interest expense from N96.03 billion to N98.77 billion, net interest income rose by 23.7 per cent to N165.2 billion in 2016 compared with N133.6 billion in 2015. This underlined the profitability of the group’s core banking business. Group profit before tax grew by 32.4 per cent to N90.64 billion in 2016 as against N68.45 billion in 2015. After taxes, net profit rose by 21.1 per cent from N59.65 billion to N72.26 billion. With these, earnings per share increased from N1.79 in 2015 to N2.04 in 2016.

UBA Group’s balance sheet also emerged stronger with total assets rising by 27.3 per cent from N2.75 trillion in 2015 to N3.5 trillion in 2016. Customers’ deposit rose by 19.7 per cent from N2.08 trillion to N2.49 trillion. Loans and advances recorded above average growth of 44.2 per cent to N1.50 trillion in 2016 as against N1.04 trillion in 2015, underlining  the bank’s commitment to economic development. Shareholders’ funds also increased by 33.5 per cent from N325.83 billion in 2015 to N434.85 billion in 2016.

Key underlying ratios showed that the growth in 2016 was driven by improvements in the intrinsic operational performance and management. Net interest margin, which underlines the profitability of the core banking business, improved to 62.6 per cent in 2016 as against 58.2 per cent in 2015. This corroborated the reduction in cost of fund. Pre-tax profit margin, which measures the underlining profitability of the group’s businesses, also improved from 21.7 per cent in 2015 to 23.6 per cent in 2016.

On the back of improved earnings, the bank increased dividend payout to shareholders by 25 per cent, further enhancing the total real return on investment built up significantly by capital appreciation. Shareholders received final dividend payment of N19.9 billion for the 2016 business year, in addition to N7.3 billion interim dividend paid after the audit of its 2016 half-year results. With this, shareholders received a final dividend per share of 55 kobo in addition to interim dividend of 20 kobo, bringing total dividend for the 2016 business year to 75 kobo as against 60 kobo paid for the 2015 business year. A dividend yield of more than 14 per cent further placed UBA within the top yields at the stock market. This surpassed the 13.01 per cent coupon on the two-year tenored Federal Government National Savings Bonds.

Sustained growth

The latest audit report confirmed UBA Group’s steady performance over the years. A five-year medium term review showed that total assets have grown steadily from N2.27 trillion in 2012 to N3.50 trillion in 2016. Net loans and advances more than doubled from N658.9 billion in 2012 to N1.50 trillion in 2016. Customers’ deposits also followed the uptrend, jumping from N1.72 trillion in 2012 to N2.49 trillion in 2016. Shareholders’ funds rose consecutively from N189.11 billion in 2012 to N434.85 billion in 2016. Profit before tax, which stood at N52.01 billion in 2012, had defied recession to rise to N90.64 billion in 2016 while profit after tax rose from N54.77 billion in 2012 to N72.26 billion in 2016.

Most analysts have rated UBA Group high on its fundamentals. “We note improvement in profitability and the bank’s good asset quality. The rating takes into cognizance the weak macroeconomic climate on the banking industry’s asset quality, in which we do not expect UBA to be excluded. Nonetheless, we note positively its diversified geographical reach, which will cushion to an extent the impact of the weak Nigerian economic climate,” Agusto & Co stated in its recent credit rating report.

Nigeria’s foremost local rating agency, Agusto & Co,  had upgraded UBA’s rating from “A+” to “Aa-”, with a stable outlook, citing the bank’s improved capitalisation, good liquidity and large pool of stable deposits, strong domestic presence supported by the bank’s extensive branch network and growing alternative banking channels.

Also, Fitch International, one of the foremost global rating agencies, in its latest report affirmed and upgraded its ratings for the bank citing strong earnings and asset quality. Fitch affirmed UBA’s viability rating at “B” as the pan-African banking group continues to sustain its benchmark asset quality and strong profitability amidst industry and macroeconomic challenges. UBA is one of the few banks with strong risk management framework, which has helped kept non-performing loans ratio at a moderate level of 1.74 per cent as at the end of March 2016.

Strength in diversity

Other African subsidiaries contributed about one hird of the group’s profit in 2016, reflecting the increasing market share of the group outside its Nigerian home. UBA operates in 18 other African countries including Ghana, Republic of Benin, Liberia, Cote d’Ivoire, Burkina Faso, Guinea, Senegal, Sierra Leone, Mozambique, Zambia, Uganda, Tanzania, Kenya, Congo DR, Congo Brazzaville, Cameroon, Chad and Gabon. UBA also has presence in United Kingdom, United States and France.

Geographical segment analysis showed the group performance was buoyed by above average growths in its foreign subsidiaries. The other 18 African subsidiaries recorded pre and post tax profit of N31.4 billion and N24.32 billion respectively on total earnings of N121.9 billion in 2016, considerable growths on pre-tax profit of N18.8 billion and post-tax profit of N14.14 billion recorded on total incomes of N67.72 billion in 2015. Other non-African global operations also improved in 2016 with total income of N9.8 billion and pre and post tax profits of N3.4 billion and N3.37 billion respectively. Other non-African global subsidiaries had recorded gross earnings of N6.01 billion and pre and post tax profit of N1.95 billion each in 2015.

Operating segment analysis also showed that the overall performance rested on evenly spread improvements across the key business segments. Corporate banking recorded gross earnings of N116.63 billion, profit before tax of N43.46 billion and profit after tax of N37.69 billion in 2016 compared with N101.07 billion, N29.04 billion and N25.31 billion recorded respectively in 2015. Retail and commercial banking segment, the largest segment, grew top-line to N227.57 billion in 2016 with profits before and after  tax of N29.44 billion and N20.05 billion respectively. Total revenue in the segment had stood at N185.19 billion in 2015 with profit before tax of N26.52 billion and profit after tax of N23.11 billion.

Outlook

The board and management of UBA said the banking group is well-positioned for sustainable long-term growth that will continue to ensure commensurate returns to shareholders. Chairman, United Bank for Africa (UBA) Plc, Mr. Tony Elumelu, noted that most African countries were implementing policy measures that should help stimulate inclusive economic growth, ease macro pressures and lower the cost of doing business. According to him, while Africa has experienced a difficult period; the UBA group welcomed 2017 with renewed optimism as it truly believes that “Africa is Rising”.

“Our pan- Africa operations have delivered on the promises we made at the outset of our growth strategy and we are beginning to reap the benefits of one the largest network in Africa. As we navigate the fast changing market place, we are increasingly digitalising our core business, as we explore new markets and means of embracing customers experience, gain increased share of customers’ wallet and offer new services. I am very optimistic that we will sustain the strong growth trajectory, as we continue to gain market share, leveraging our core values of enterprise, excellence and execution,” Elumelu outlined.

Group managing director, United Bank for Africa (UBA) Plc, Mr. Kennedy Uzoka also assured that the bank is optimistic of continuing growth in the years ahead.

“The 2017 outlook remains positive in most of our markets. We are not aware unaware of the macro challenges, competition and constantly changing customer preferences.  We will further sweat our unique Pan Africa platform to improve productivity, extract efficiency gains and grow our share of customers’ wallet across all business lines and markets,” Uzoka said.

According to him, as the banking group continues with its customer first philosophy, shareholders can look forward to better performance, especially with the outlook remaining positive in most of the group’s markets.

“We will build on our strong governance culture, zero-tolerance for infractions and transparency in furthering our frontiers of leadership in the African market,” Uzoka said.

 

 

 

 

 

 

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Lovers of Lagos Applaud House of Assembly for Standing with Hon. Meranda

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4 days ago

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February 1, 2025

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The Lovers of Lagos, a coalition of concerned citizens and political observers, have commended the Lagos State House of Assembly for upholding legislative independence and standing firmly with Hon. Meranda, despite reported arrests by the Department of State Services (DSS) and alleged intervention by party leaders.

 

Their praise comes after members of the Assembly reaffirmed that the removal of former Speaker Hon. Mudashiru Obasa was carried out lawfully, in strict compliance with the 1999 Constitution of the Federal Republic of Nigeria and the Powers and Privileges Act. The lawmakers, citing Sections 92 and 96 of the Constitution, maintained that due process was followed, and any attempts to challenge the action were attempts to undermine the Assembly’s authority.

 

In a statement released after their appearance at the DSS Lagos Command in Shangisha, the lawmakers assured Lagosians that the House of Assembly remains an independent arm of government, committed to serving the best interests of the people.

 

“The Lagos State House of Assembly will not bow to pressure or intimidation. Our actions were guided by constitutional provisions, and we will continue to uphold the integrity of the legislative process,” the lawmakers stated.

 

Despite rumors of political interference, the House stood firm in its decision, a stance that has earned it the admiration of Lovers of Lagos. The group expressed its confidence in the Assembly’s ability to protect democratic values and legislative autonomy.

 

Additionally, the lawmakers commended the DSS for its professionalism in handling the situation, ensuring that engagements were conducted smoothly and respectfully. All detained lawmakers have since been released.

 

Reiterating their commitment to legislative duties, the Assembly called on all stakeholders—including the executive and the public—to respect the sanctity of legislative processes and avoid undue interference.

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Court Vacates Order Freezing Assets Of GHL, Obaigbena, Others….

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6 days ago

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January 30, 2025

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Justice Deinde Dipeolu of the Federal High Court in Lagos has lifted the Mareva Injunction that froze the assets of an oil and gas services company, General Hydrocarbons Limited (GHL), over its alleged refusal to pay a $225.8 million loan facility awarded to it by First Bank of Nigeria Limited.

 

 

The judge also held that he has jurisdiction over the suit filed by First Bank on the grounds that the case is not an abuse of court process as the subject matter and the parties involved are different from those before Justice Ambrose Lewis-Allagoa.

 

However, Justice Dipeolu stated that he would not have granted the Mareva injunction had he been fully aware of Justice Lewis-Allagoa’s prior order in Suit No. 1953.

 

In a ruling delivered on December 30, 2024, Justice Dipeolu put restrictions in place, prohibiting all commercial banks from releasing or dealing with any assets or funds belonging to General Hydrocarbons Limited, its agents, subsidiaries, or related entities up to the amount claimed by the plaintiffs.

Additionally, the judge issued a preliminary injunction barring Nduka Obaigbena, Efe Damilola

 

 

Obaigbena, and Olabisi Eka Obaigbena—directors of General Hydrocarbons Limited—from transferring or dissipating any of their assets located in Nigeria, whether movable or immovable, until the court makes a decision on the Motion on Notice for an interlocutory injunction.

 

Earlier, GHL had obtained an order from Justice Lewis-Allagoa in another case, which prevented First Bank of Nigeria Limited from taking further action to recover the loan until the parties fulfilled their obligation to engage in arbitration.

 

 

While moving the application, challenging the Mareva Injunction GHL’s counsel, Dr Abiodun Layonu (SAN), argued that the Injunction represented an abuse of the court process, claiming that First Bank had failed to disclose the previous order by Justice Lewis-Allagoa, which had restrained the bank from further action.

 

In response, First Bank lawyer Victor Ogude (SAN) argued that his client did not deceive the court to obtain the order and that the bank provided all relevant facts in its affidavit supporting the suit.

 

 

He also claimed that no law restricts their constitutional right to seek judicial redress for disputes.

 

 

In his ruling, Justice Dipeolu acknowledged that while the current suit was not an abuse of process, it had to respect the prior orders issued by his brother judge.

 

Justice Dipeolu held, “I have carefully read through all that is contained in the Originating Summons in Suit No:FHC/L/CS/1953/24 and the Interim Orders of Hon. Justice Allagoa J. dated the 12th of December, 2024.

 

“It appears to me that the Interim Orders made by Hon. Justice Allagoa J. revolves around the arbitration proceedings between the first Defendant and the first Plaintiff in this case, which arbitration proceedings is pursuant to Clause 12 (c) of the Agreement between the 1st Defendant and the 1st Plaintiff dated the 29th of May, 2021. This position is reflected in all the Interim Orders granted on the 12th of December, 2024.

 

 

Although the Interim Orders made by this Court on the 30th of December, 2024 are about the subsequent facilities agreement between the first Plaintiff and the first Defendant and it does not extend to the receivables in the agreement of 29 of May, 2021, also, the present suit on the face of it if placed side by side with FHC/L/CS/1953/2024 is not an abuse of process.

 

“For the reasons given above, however, in view of the Orders of Allagoa J. made on the 12th of December, 2024, the Mareva order granted by this Court on 30th December is hereby set aside,” the court stated.

 

Justice Dipeolu affirmed the court’s jurisdiction to grant the initial Mareva order but concluded that the injunction could not stand in light of conflicting orders.

 

 

Furthermore, the court ruled that the second to fifth defendants, who were affected by the Mareva orders, had the right to seek the dismissal of the suit.

 

Justice Dipeolu has adjourned the case to

February 19, 2025, for further proceedings.

 

 

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REA director, Abubakar Sambo, arraigned for ‘N1.84bn fraud’

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6 days ago

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January 30, 2025

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Abubakar Sambo, the director of Finance and Account of the Rural Electrification Agency, was on Monday re-arraigned by the Independent Corrupt Practices and Other Related Offences Commission, ICPC, for alleged N1.84 billion fraud.

 

He was arraigned before Justice Musa Liman of a Federal High Court on three counts of alleged diversion of funds to personal accounts.

 

His lawyer, Y. D. Dangana, SAN, prayed the court to allow Sambo to continue to enjoy bail terms as earlier granted by a sister court and ICPC’s counsel, Osuobeni Akponimisingha, did not oppose the application.

 

 

Justice Liman, therefore, admitted the defendant to the earlier bail conditions granted by Justice Bolaji Olajuwon.

 

The judge adjourned the matter until April 2 for commencement for trial.

 

The News Agency of Nigeria reports that Justice Olajuwon of a FHC in Abuja had, on June 24, 2024, granted Sambo a bail in the sum of N200 million with two sureties in the like sum.

 

 

The judge held that the sureties must have landed property within the jurisdiction of the court with original certificates of occupancy (CofO) which must be deposited with the deputy chief registrar of the court.

 

She equally ordered the sureties to provide affidavits of their tax clearance in the last three years with a one passport photograph each.

 

Justice Olajuwon adjourned the matter until October 17 for trial commencement.

 

 

However, the judge was transferred to another division of the court, making the case to start denovo (afresh).

 

NAN reports that the anti-corruption commission had, in the charge marked: FHC/ABJ/CR/209/2024, sued Abubakar Abdullahi Sambo as sole defendant.

 

In the charge dated May 8, 2024, but filed May 10, 2024 by Akponimisingha, an Assistant Chief Legal Officer in the commission, the ICPC alleged that Sambo sometime in March 2023 or thereabout while being the Payment Finalizer on the Government integrated Financial Management Information System (GIFMIS) platform of REA did finalise the payment of the totai sum of N1.84 billion (N1,835,000,000.00).

 

 

It alleged that the funds were done in different tranches for the use of Henrrientta Onomen Okojie, Asuni Adejoke Aminat, Usman Kwakwa, Laure Shehu Abduilahi, Emmanuel Pada Titus and Musa Umar Karaye for a purported project supervision exercise without requisite approval, thereby contributing to the economic adversity of the REA.

 

The commission said the offence was contrary to and punishable under Section 68 of the Public Enterprise Regulatory Commission Act, CAP. P39, Laws of the Federation, 2004.

 

In count two, Sambo was accused to have used his access password to access the REA’s GIFMIS platform and finalised the payment of the sum of N1.84 billion in different tranches for the use of Okojie, Aminat, Kwakwa, Abdullahi, Titus and Karaye for a purported project supervision exercise without authority.

 

 

The offence was said to be contrary to and punishable under Section 6(4) of the Cybercrimes (Prohibition, Prevention, Etc) Act, 2015.

 

In count three, Sambo was alleged to have conferred corrupt advantage on Okojie, Aminat, Kwakwa, Abdullahi, Titus and Karaye when he used his access password to access the REA’s GIFMIS platform and finalised the payment of N1.84 billion in different tranches for their use for a purported project supervision exercise without requisite approvals.

 

The ICPC said the offence contrary to and punishable under Section 19 of the Corrupt Practices and Other Related Offences Act, 2000.

 

 

NAN reports that Karaye, Titus and Okojie were also arraigned before Justice Emeka Nwite of a sister court on separate four-count charge preferred against them.

 

While Karaye and Titus were arraigned before Justice Nwite on June 13, 2024, Okojie was arraigned on June 14, 2024.

 

Usman Ahmed Kwakwa was also arraigned on June 13, 2024 on separate criminal charge before the judge and all of them were admitted to a N50 million each with two sureties each in the like sum.

 

 

In the charge marked: FHC/ABJ/CR/203/24 filed against Okojie, she was alleged to have in count one, sometime in March 2023 or thereabout, with intent to defraud the REA, received the sum of N342 million in different tranches through her Access Bank Account: 0009022275 under the false pretence of project supervision.

 

The offence is said to be contrary to Section 1(1)(a) and punishable under Section 1(3) of the Advance Fraud and Other Fraud Related Offences Act, 2006

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