UBA’s half-year profit jumps more than fivefold to N378 billion

UBA’s half-year profit jumps more than fivefold to N378 billion

United Bank for Africa (UBA) said its profit for the first half of the year increased by more than five times compared to the same period of 2022, as a weakening in the value of the naira in June helped strengthen earnings.

The lender, one of the biggest five in the country by assets as well as by market value, earned N418.3 billion in net trading and foreign exchange gain during the period, when net profit accelerated to N378.2 billion from N70.3 billion.

UBA’s sterling result is the latest among those of Nigerian banks holding foreign currency-denominated assets, which dramatically turned into a stroke of luck to those lenders after the country allowed its currency to drop by about 40 per cent against the dollar in June as part of measures to win foreign investors back.

Dollar loans represented more than half of UBA’s N4.5 trillion loans and advances to customers as of the end of June, according to the bank’s audited earnings report issued on Tuesday. UBA operates in at least 20 African countries in addition to offices in London, Paris and New York.

“Foreign exchange income comprises trading income on foreign currencies and gains and losses from revaluation of trading position,” UBA said in its financial report.

Tier 1 peers FBN Holdings, GTCO and Zenith had similarly leveraged gains from revalued overseas assets as the anchor for record profits. The financial report of Access Holdings, the country’s biggest lender, is to be released any moment soon.

Net interest income for the period jumped 56.7 per cent to N278.1 billion, riding on the wave of interest rate hikes in Africa’s largest economy that is helping lenders to charge more for loans.

But banks are paying for that another way as loan defaults continue to soar. UBA increased its impairment charge for credit losses on loans by more than twelve times to N143.9 billion.

Profit before tax stood at N403.6 billion compared to N85.8 billion a year ago.

In a separate statement released Tuesday, UBA announced an interim dividend of N0.50 per share, a 150 per cent rise over what it declared in the same period of last year. That translates to a payout of N17.1 billion.

The stock has yielded 81.6 per cent since the beginning of the year.