UNITED BANK FOR AFRICA PLC Q1'22 Earnings Release - Profits up 18% y/y on Non-Interest Revenue gains
| UBA recently released its Q1’22 earnings, posting an 18% y/y growth in Gross Earnings to ₦184 billion, in line with our estimate. This was driven by a 15% y/y rise in Interest Income to ₦125 billion, as the bank saw a 30% jump in interest income from investment securities. Meanwhile, Non-Interest Revenue (NIR) also supported earnings, rising 27% y/y to ₦41 billion, driven by a 43% surge in FX and trading income, specifically, income from Fixed Income securities trading, which grew 4.3x y/y. | |||||
| Although Net Interest Income grew 14% y/y to ₦85 billion, Interest Expense was 18% higher at ₦40 billion. We estimate that Cost of Funds (CoF) inched up 10bps to 2.1%, while Net Interest Margin (NIM) declined 10bps to 4.9%. On the cost front, Impairment charges doubled y/y to ₦4 billion- recoveries also halved y/y, while Opex grew 20% y/y to ₦78 billion, driven by a 20% y/y surge in staff costs. Overall, the bank’s cost-to-income ratio came in lower than FY’21 at 61.7% (FY’21: 62.9%) but higher than Q1’21 (60.4%). Consequently, PBT grew by 18% y/y to ₦44.5 billion, while PAT grew 18% y/y to ₦41.5 billion, 10% above our estimate. |
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| FY’22 projections improved on stronger NIR numbers UBA’s Q1 performance was impressive, especially with regard to NIR. The bank reported a 20% y/y rise in Commissions and fees to ₦42 billion, while improved trading volumes in the FI space helped boost revenue on that front to a third of FY’21 total. On that note, we have revised our FY’22 NIR projection upward to ₦155 billion (Previous: ₦137 billion). |
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