UBA PLC 9M'21 Earnings Release - Bank Maintains Earnings Momentum For Record Profits

Bank maintains earnings momentum for record profits                                                   

Yesterday, UBA released its 9M’21 results, reporting an 8% y/y growth in Gross Earnings to ₦489 billion, reflecting the advances made both in the domestic and international economies, thanks to vaccine rollouts returning economic activities closer to pre-pandemic levels. This was evident in the 8% y/y improvement in Interest Income to ₦343 billion. Meanwhile, Interest Expense fell 13% y/y to ₦114 billion, this was due to cost of funds moderating to 2.1% from 3.3% in 9M’20, while interest bearing liabilities grew to ₦7.1 trillion. Overall, this meant that the bank’s Net-Interest Income (NII) was 23% higher y/y at ₦229 billion. UBA saw a 5% y/y decline in NIR to ₦102 billion, dragged by a 40% y/y decline in trading and FX income which offset a 33% y/y growth in fees and commissions to ₦111 billion. Cost-wise, net writebacks of ₦732 million in Q3 drove the 9M impairments to ₦3 billion, 70%  lower y/y. However, Opex grew by 7% y/y to ₦206 billion. Consequently, PBT grew by 36% y/y to ₦123 billion, while PAT grew 36% y/y to ₦105 billion, yielding an EPS of ₦2.94 and annualized ROAE of 18.0% (FY’20 ROAE: 17.2%).       

UBA set for record FY’21 profits

Thus far, the bank’s PAT for 9M’21 was close to FY’20 profits (₦114 billion), the highest in the bank’s history. Thanks to the bank’s outperformance in Q3, we have revised our estimates for the FY’21 period. Firstly, we raised our Gross Earnings estimate to ₦646 billion (Previous: ₦623 billion), driven byour adjusted Interest Income expectation of ₦458 billion (Previous: ₦435 billion) and Interest Expense figure of ₦158 billion (₦151 billion), giving a new NII projection of ₦301 billion (₦Previous: ₦283 billion). On the other hand, we lowered our impairments estimate to reflect the writebacks in Q3, arriving at a new FY’21 figure of ₦11 billion (Previous ₦20 billion). Furthermore, we moderated our Opex estimate to ₦246 billion (Previous: ₦253 billion) to arrive at a PBT figure of ₦179 billion (Previous: ₦147 billion) and a PAT projection of ₦143 billion (Previous: ₦118 billion), yielding an ROAE of 18.5% (Previous: 15.4%), with an EPS of ₦4.03/share (Previous: ₦3.31)and a DPS expectation of ₦1.00/share (Previous: ₦0.80), a dividend payout of 25%."