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United Bank for Africa (UBA) Q1:2023 Earnings Result | Interest Income Takes Center Stage

United Bank for Africa Plc. recently released its unaudited Q1:2023 financial result. Gross earnings grew 47.12% YoY to NGN271.18bn on the back of interest and non-interest income growth, slightly exceeding our Q1:2023 estimates. Interest Income soared 53.41% YoY to NGN191.88bn while Non-Interest Income grew by 33.84% YoY to NGN79.30bn. On the other side, Operating Expenses advanced 38.21% YoY to NGN107.31bn owing to rising energy and staff costs. Profit Before Tax (PBT) and Profit After Tax (PAT) grew by 37.97% YoY and 29.14% YoY respectively to NGN61.37bn and NGN53.59bn consecutively. Overall, Net Profit Margin slipped by 2.75% to 19.76% in the period.

We retain our 2023 target price for UBA at NGN14.38 on the back of anticipated higher interest and non-interest income in 2023. At its current price of NGN7.90 as of 19th April 2023, this translates to an upside prospect of 82%. Thus, we rate UBA a STRONG BUY.

Underlying
United Bank for Africa PLC

Provider
ARM Securities Limited
ARM Securities Limited

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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