United Bank for Africa (UBA) 2022FY Earnings Result-Impressive Bottom-line Performance amid Spiraling Impairment Provisions
United Bank for Africa Plc. released the audited Full-year results for 2022, showing an impressive topline and bottom-line performance. Gross Earnings, which exceeded our 2022FY estimates, grew by 29.23% YoY to NGN853.74bn on the wheels of increased interest and non-interest income. Interest Income grew by 17.48% YoY to NGN557.15bn while Non-Interest Income soared 59.19% YoY to NGN296.02bn. On the other hand, Operating Expenses surged 25.59% YoY to NGN350.39bn owing to rising staff costs and contract services. Profit Before Tax (PBT) and Profit After Tax (PAT), which both exceeded our estimates, grew by 31.23% YoY and 43.48% YoY respectively to NGN200.88bn and NGN270.28bn consecutively. This feeds off higher non-interest revenue, an offshoot of impressive trading and foreign exchange gains. Overall, Net Profit Margin improved by 1.98% to 19.96% in the period.
We adjust our 2023 target price for UBA to NGN14.38 on the back of anticipated higher interest and non-interest income in 2023. At its current price of NGN8.35 as of 4th April 2023, this translates to an upside prospect of 72%. Thus, we put a “STRONG BUY” rating on the stock.
ARM Securities Limited is a full-service brokerage house that offers best-in-class brokerage services to local as well as foreign private and institutional investors. Formerly known as Hamilton Hammer, the Company commenced operation in 1994 and was acquired by ARM Investment Managers in 2008--an acquisition which has successfully re-positioned the company as a recognized brokerage firm in Nigeria. The Company is a dealing member of the Nigerian Stock Exchange (NSE) and is regulated by Securities and Exchange Commission (SEC). ARM Securities research team provides insightful commentaries on the Nigerian economy and its equity and debt markets using an approach which incorporates a thorough understanding of the fundamentals of the industries and companies under coverage. The research therefore adopts an integrated methodology of top-down analysis and bottom-up stock selection, which focuses on publicly quoted companies on the Nigerian Stock Exchange that are judged to offer the highest potential for earnings growth. In addition, its analysts provide periodic commentaries on a range of topical global and local issues which provide investing clients with a holistic view of the opportunities and risks in today’s financial market landscape.
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