United Bank of Africa (UBA) has crossed N1 trillion in its net interest income, its highest in thirteen years on rate hikes.
The bank’s audited financial result for December 2024 filed with the Nigerian Exchange Limited on Monday revealed that its interest income calculated using the effective interest rate rose to N2.3 trillion, a 114.9 percent rise from N1.03 trillion while the bank’s interest expense surged 128 percent to N839.2 billion from N367.8 billion driven by the high-interest rate environment.
Ugo Nwaghodoh, UBA’s executive director, finance & risk management, said the bank recorded triple-digit growth in net interest income, resulting in improvement in net interest margin from 6.83 percent in 2023 to 9.02 percent, while also recording strong double-digit growth in fee and commission income lines of 91.66 percent.
According to CardinalStone research in a note, UBA achieved triple-digit growth in net interest income, which more than compensated for the 33.9 percent decline in non-interest revenue and a significant 69 percent increase in operating expenses. Ultimately, profit before tax expanded by 6.1 percent to reach N803.7 billion.”
The Central Bank of Nigeria (CBN) increased interest rates by a total of 850 basis points in 2024, thereby increasing the interest charged by banks on loans.
In February, the CBN retained its benchmark interest rate known as the Policy Rate (MPR) at 27.5 percent, following the rebased consumer price index (CPI). As a result, UBA revenue streams reported significant growth during the reviewed period.
Data obtained from the NGX revealed the bank’s foreign currency revaluation gain rose to N293 billion from N26 billion while its foreign exchange trading income rose to N134 billion from N112 billion.
Further analysis reveals that fees and commission expense reported by the bank during the period grew to N233 billion from N118.4 billion. Also, fees and commission income rose to N589 billion from N307 billion.
The strong y/y growth was driven by notable increases in several fee lines: Commission on turnover grew by 97.1 percent, account maintenance fees grew by 51.5 percent, funds transfer fees increased by 53.3 percent, creditrelated fees and commissions rose by 176.9 percent, remittance fees jumped by 158.4 percent, and trade transactions were up 130.59 percent.
Also, e-banking income, which accounted for 40.1 percent of total fees and commissions in 2024, grew by 88.2 percent y/y to reach N236.3 billion. However, this growth has been consistently offset by high e-banking expenses, which amounted to N179.0 billion, resulting in a net e-banking income of N57.3 billion.
The bank reported a 26.4 percent increase in its after-tax profit to close at N766.5 billion, and earnings per share (EPS) improved to N21.73 from N17.49 in 2023.
UBA in a statement said the profit is derived from high-quality income streams from funding intermediation, fees and commissions, thus reflecting strong long-term, sustainable revenue generation capacity.
“Our ex-Nigeria (Rest of Africa & International) operations have expanded significantly over the past five years, now contributing 51.7 percent of Group revenue, up from 31 percent in 2019, delivering diversification benefits and further boosting long-term shareholder value. This will continue to grow, as we further explore strategic markets that align with our overall vision. We are currently upgrading our business scope and authorisation in France, and considering other viable markets in the short to medium term,” it said.
Meanwhile, UBA reported higher impairment charges of N253.6 billion. However, the cost of risk (CoR) slipped to 3.3 percent from 3.5 percent in FY’23, given the 35.3 percent increase in gross loans to N7.51 trillion.
As a result of the high cost of doing business its operating expenses jumped by 69.0 percent to N1.06 trillion in the period on the back of higher wages, fueling & maintenance, contract services, and regulatory fees. As a result, UBA’s cost-to-income ratio jumped to 50.0 percent from 39.3 percent in FY’23.
