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UBA Grows Asset By N2trn in 2020


In a pandemic year that left many ravaged forcing them to close shops and lenders are groaning under shrinking earnings, United Bank for Africa [UBA] expanded its asset base by over N2 trillion or 37 percent in 2020. This is the most rapid expansion in the size of the balance sheet the bank has recorded in a decade, at least with a closing asset base of N7.7 trillion.


The bank’s audited accounts for the year shows that investment securities led the asset expansion drive with a top record growth of over 64 percent to close at N2.6 trillion for the year. This is the highest growth rate in the investment portfolio for the bank in several years and a big upturn from a 4 percent decline in 2019.


Cash and bank balances rose by 34 percent to almost N1.9 trillion, accounting for close to a quarter of the balance sheet.

The bank’s principal assets – loans and advances to customers, grew by 24 percent to N2.55 trillion but the share in the balance sheet dropped from about 37 percent in the prior financial year to 31 percent at the end of 2020. It is however the strongest growth in customer lending volume in four years.


The asset expansion in the year was funded by a huge inflow of customer deposits, which rose by as much as 48 percent to N5.7 trillion at the end of the year. UBA has not seen that level of customer deposits expansion since 2011 at least. Customer deposits represent 74 percent of the bank’s balance sheet in 2020, an increase from 68 percent in 2019.

The strength in asset growth however failed to extend to revenue performance. Nevertheless, the upturn in earnings recorded in the third quarter gained further momentum in the final quarter.


Gross earnings amounted to over N620 billion for UBA at the close of the 2020 financial year. This means up to N195 billion or 31 percent of the closing revenue figure was generated in the final quarter. The improved performance in the final quarter stretched out the full-year revenue growth rate from 5 percent at the end of the third quarter to close to 11 percent.

The strength in earnings in the year came from net trading and foreign exchange income, which grew by 60 percent to over N59 billion. Fee and commission income also grew by roughly 15 percent to N127 billion during the year.


The main income line – interest earnings increased by 5.7 percent to almost N428 billion. This is the slowest increase in interest income in many years. This contrasts with the highest increases in key earning assets – loans and advances and investment portfolios recorded in the year.

In line with the general banking industry trend last year, interest expenses maintained a downward direction all through the year. At a little over N168 billion, interest expenses went down by 8 percent, the first decline in interest expenses for UBA in many years.


The cost-saving realised from the drop in the cost of funds reinforced the increase in interest income during the year. The cost-saving plus the gain in interest earnings enabled an increase of 17 percent in net interest income to stand at over N259 billion at the end of 2020.


Loan impairment expenses grew by 48 percent to N27 billion in the year and claimed the part of the cost saved from interest expenses. The final quarter saw an upsurge in loan impairment expenses after a slowdown in the third quarter. As much as N16 billion or 59 percent of the closing loan loss charges for the year was incurred in the final quarter.


Total operating cost grew ahead of gross earnings at 15 percent to N250 billion compared to 11 percent. It claimed an increased share of gross earnings in the year at 40 percent.


The improvement in revenue and the cost-saving from interest expenses were the highpoints of the earnings story of UBA in 2020. These enabled the bank to absorb cost increases in loan impairment and operating cost and yet permitted a substantial gain in profit margin.


The profit margin improved from 15.4 percent in 2019 to 18.3 percent at the end of 2020. This is the highest profit margin for the bank since 2016.


The gain in profit margin enabled the bank to grow profit well ahead of revenue in the year. UBA closed the 2020 financial year with an after-tax profit in the region of N114 billion, an increase of almost 28 percent.


A turnaround happened in the final quarter from a 5.5 percent profit drop at the end of the third quarter to the strong finishing at full year. The final quarter produced N37 billion or 32 percent of the bank’s full-year profit.


UBA earned N3.20 per share at the end of the 2020 operations, an improvement from N2.52 per share at the end of 2019. Directors have proposed a final cash dividend of 35 kobo per share for the 2020 operations, upon the interim cash dividend of 17 kobo paid last September.

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