LAGOS (Sundiata Post) – United Bank for Africa (UBA) Quarter four (Q4) 2015 results showed that the bank delivered a Return on Average Equity (ROAE) of over 20%. This marks the fourth consecutive year that the bank has delivered strong double-digit ROAE. However, disappointment’ in non-interest income, largely due to fair value adjustments on derivatives, was offset by positive surprises in net recoveries and on the operating expense (OPEX) line.
The financial analysis for UBA Q4 results show that its management was bullish on loan growth for 2016 (guidance of 10-15%). Although both UBA’s Q4 2015 Profit Before Tax (PBT) (N11.1bn) and Profit After Tax (PAT) (N9.5bn) were down year-on-year (y/y) by -19% y/y and -37% y/y respectively, it is believed that the main driver behind the y/y declines was the non-interest income line which saw a -74% y/y fall to N7.0bn due to marked-to-market losses.
This more than offset a strong 48% y/y growth in funding income to N35.8bn. Although operating expenses were also down -12% y/y and the provisions line actually recorded a positive net recovery figure of N342m vs –N836bn a year earlier, these were not sufficient to prevent the y/y decline in PBT. As for the PAT, although the tax charge was limited to just N9m, other comprehensive income came in at –N1.6bn, a significant swing from the positive N3.5bn that the bank had recorded in Q4 2014.
Both PBT and PAT were down markedly, by -40% and -56% respectively. Relative to forecast, PBT beat by 38% while PAT was ahead by 88%. Positive surprises on the provisions line, in opex, on the tax and other comprehensive income lines more than offset lower-than-expected results in non-interest income. UBA proposed a final dividend of 40 kobo, (eq. to a yield of 11.7% at the time of the announcement).