United Bank for Africa Plc (UBA) has announced a 26.1% increase in its profit after tax for the 2024 financial year, reaching N766.57 billion compared to N607.70 billion in 2023. This growth translates to an earnings per share of N21.73, up from N17.49 in the previous year.
The bank’s strong performance was driven by a substantial 120.4% year-on-year rise in core income, which helped offset a 33.9% decline in non-core income.
UBA’s Board has proposed a final dividend of N3.00 per share for 2024, up from N2.30 per share in 2023, resulting in a dividend yield of 8.2% based on the last closing share price of N36.80 as of March 21. This brings the total dividend payout for the year to N5.00 per share, compared to N2.80 per share in 2023.
The group’s funded income surged by 120.4% year-on-year to N2.37 trillion, supported by increased earnings across all revenue streams. Higher monetary policy rates and a 55.4% growth in interest-earning assets (to N25.47 trillion) contributed to increased returns from investment securities (+137.0% y/y to N1.20 trillion), customer loans and advances (+98.9% y/y to N779.69 billion), bank loans and advances (+127.2% y/y to N241.65 billion), and placements with banks (+109.4% y/y to N146.08 billion).
The higher interest rate environment also impacted UBA’s interest expenses, which rose by 128.2% year-on-year to N839.25 billion. This increase was driven by higher costs on customer deposits (+85.2% y/y to N456.61 billion), bank deposits (+277.8% y/y to N196.63 billion), borrowings (+169.9% y/y to N180.56 billion), and lease liabilities (+131.0% y/y to N5.45 billion). Despite this, the bank maintained a CASA ratio of 88.5%, up from 85.5% in 2023.
Non-interest income declined by 33.9% year-on-year to N582.85 billion, mainly due to a N342.21 billion fair value loss on derivatives. However, gains were recorded in net fees and commissions (+87.8% y/y to N355.00 billion), FX revaluation gains (+1,002.6% y/y to N293.09 billion), FX trading income (+19.8% y/y to N134.31 billion), and investment securities (+52.7% y/y to N96.75 billion). Overall, operating income rose by 34.5% year-on-year to N1.86 trillion.
Operating expenses increased by 69.0% year-on-year to N1.06 trillion due to inflationary pressures. Costs rose across personnel expenses (+72.1% y/y to N314.66 billion), fuel, repairs, and maintenance (+70.9% y/y to N101.28 billion), contract services (+70.1% y/y to N111.88 billion), AMCON levy (+78.2% y/y to N71.91 billion), and NDIC premium (+97.3% y/y to N47.56 billion). As a result, UBA’s cost-to-income ratio (ex-LLE) increased to 56.8% from 45.2% in 2023, reflecting a decline in operational efficiency.
Despite these expenses, UBA’s profit before tax grew by 6.1% year-on-year to N803.73 billion.
In compliance with a bill passed by the National Assembly in 2024, which imposed a one-time 70.0% levy on realized FX profits for 2023 and 2024, UBA recorded a windfall tax of N57.91 billion (N24.82 billion for 2023 and N33.09 billion for 2024). However, tax credits of N181.92 billion helped offset these costs, reducing the overall tax expense for 2024 to N37.16 billion.
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