UNITED BANK FOR AFRICA PLC H1'21 Earnings Release - Profits jump 36% y/y

Yesterday, UBA released its H1’21 results, reporting a 5% y/y growth in Gross Earnings to ₦315 billion. This came as the result of an 8% y/y improvement in Interest Income to ₦223 billion. Also, the bank reported a 5% q/q growth in Interest Income in Q2, despite a 479bps drop in yield on assets to 4.8%, thanks to a 7% q/q growth in Interest Earning Assets. Meanwhile, Interest Expense fell 14% y/y to ₦75 billion, despite a 563bps rise in cost of funds to 2.1%. Overall, this meant that, although the bank’s Net-Interest Income came in 1% lower q/q, it was still 24% higher y/y at ₦148 billion.

For Non-Interest Revenue (NIR), the bank reported a flat q/q performance and a 17% y/y decline to ₦64 billion, amid a 74% y/y decline in trading and FX income. However, the bank did report a 33% y/y growth in fees and commissions to ₦74 billion, following an impressive 12% growth in Q2.

On the cost side, despite loan loss impairments rising 4% q/q in Q2, the bank posted a 47% y/y decline in impairments to ₦4 billion. Also, Opex grew by only 1% y/y to ₦133 billion, after a 6% increase in Q2 due to AMCON charges, which were up 24% y/y so far to ₦28 billion. Consequently, PBT grew by 33% y/y to ₦76 billion, while PAT grew 36% y/y to ₦61 billion, yielding an EPS of ₦1.69 and annualized ROAE of 15.9% (FY’20 ROAE: 17.2%). The bank has also proposed an interim dividend of ₦0.20/share (H1’20: ₦0.17/share).