United Bank for Africa Plc in post trading hours today released its interim consolidated and separate financial statements for the period ended 30 June 2020, to the Nigerian Stock Exchange and the investing public.
According to the report seen by Investogist, The Directors proposed an interim dividend of N0.17 per share (30 June 2019: N0.20 per share) from the retained earnings account as at 30 June 2020.
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On Monday, the bank had notified the investing public about a delay in the release of its H1 2020 financial results, and stated that the bank was optimistic the audited financial statements will be submitted to The Exchange on or before September 29, 2020.
Analysis of the report: Income Statement
UBA maintained its interest income relative to the same period in 2019, recording N205.586 billion in H1 2020, just 0.34% higher than the N204.885 billion earned in H1 2019. Nevertheless, the bank saw a reduction in the interest income on investment securities; Treasury bills and bonds, it earned more income from loans and advances to both individual and corporate customers.
Fees and commission income also increased, 6.73% up from the N52.344 billion earned in the same period in 2019, to N55.868 billion in H1 2020. The biggest increase in this income segment came from the Electronic banking income, which increased by more than N1 billion; from N16.862 billion to N17.932 billion.
After accounting for expenses such as; fees and commission expense, employee expenses, and other operating expenses, all of which increased by 6.12%, 19.87% and 22.60% respectively, the bank recorded a Profit Before Tax (PBT) of N57.129 billion.
The PBT is 18.17% (N13.145 billion) lower than the N70.274 billion reported in H1 2019.
The Profit for the period as reported, was N44.431 billion, which shows a decline of 21.69% (N12.308 billion) from the N56.739 billion reported in the same period in 2019.
The Earnings Per Share (EPS) for the period was N1.24 (H1 2019: N1.62), as the bank achieved a 21.61% net profit margin (H1 2019: 27.69%).
Analysis of the Statement of Financial Position
UBA grew its loan portfolio from N2.061 trillion as at 31 December, 2019 to N2.186 trillion, as it attracted customer deposits at a faster rate. The deposits from customers increased by 25.24% (N967.426 billion) from N3.832 trillion as 31 December, 2019, to N4.800 trillion at 30 June, 2020.
Total Assets, Total Liabilities, and Total Equity all increased when compared to 31 December, 2019, by 20.90%, 22.66%, and 6.15% respectively.
Analysis of the report: Statement of Cash Flows
A review of the statement of cash flows show the following;
- Net cash generated from operating activities increased to N628.495 billion, from N235.747 billion. This was propelled by the increased deposits from customers.
- Net cash used in investing activities increased to N469.665 billion from N63.977 billion, mostly due to increased spending in the purchase of investment securities.
- The net cash used in financing activities was up from N37.058 billion to N302.314 billion. A repayment of borrowings to the tune of N256.210 billion (2019: N36.851 billion), and transfer to deposit from banks to the tune of N195.786 billion (2019: Nil) accounted for most of this increase.
The cash and cash equivalents at the end of the period stood at N514.887 billion, lower than the N774.713 billion held in 2019.
Table 1: Financial highlights
About the Company
United Bank for Africa Plc. (the “Group”) is a Nigerian registered company incorporated on 23 February 1961 to take over the business of British and French Bank Limited (BFB).
UBA listed its shares on the Nigerian Stock Exchange (NSE) in 1970 and became the first Nigerian bank to subsequently undertake an Initial Public Offering (IPO).
The Bank and its subsidiaries are primarily involved in corporate, commercial and retail banking, trade services, cash management, treasury and custodial services.
The company’s registered address is at 57 Marina, Lagos, Nigeria.
Evaluation of the impact of COVID-19
According to a statement in the report, the Group said it has reviewed the current uncertainty as a result of this pandemic and nothing has come to the attention of the Directors to indicate that the Group will not remain a going concern for at least twelve months from the date of this statement.
The group made a donation of N3.479 billion in Nigeria and N1.134 billion across the African continent to support efforts to tackle the COVID-19 pandemic.
Price Movement
A total of 3,523,723,566 units of UBA shares were traded on the Nigerian Stock Exchange in 2020 H1, representing 10.3% of the shares outstanding.
The 52 week high and low prices for the stock are N9.25 and N4.40 respectively. The stock gained 4.80% today to close at N6.55, from its opening price of N6.25.
Over 5 years, the stock has gained 60.15%, but 27.30% down over 3 years, and down 18.63% over 2 years. It is 7.38% up from its price at the same time last year, but 8.39% down YTD.
Source: Mytradebook
Analyst’s view
In our previous stock picks, we had rated UBA a BUY, we will be reviewing our opinion of the stock in next week’s stock pick.
At the current prices, UBA is traded at a 12 month trailing P/E (Price-to-Earnings) ratio of 2.52x, significantly lower than the NSE average and lower than many of the other tier 1 banks. This keeps the stock attractive.
Written by;
Nnamdi M.