United Bank for Africa Plc on
Tuesday released its results for the first quarter ended March 31, 2016.
The bank posted gross earnings of N54.941 billion, showing a decline
from N58.669 billion in the corresponding period of 2015.
Net interest
income rose from N30.783 billion to N34.421 billion. Profit before tax
stood at N18.083 billion, showing a decline from N18.389 billion in
2015, while profit after tax increased from N16.956 billion to N16.986
billion.
Market operators said the performance is a reflection of the economic headwinds and lull that characterised Q1.
However, reacting to the results, analysts at Cordros Capital Limited said the bank’s annualised earnings per share(EPS)) of N1.96, outperformed both their estimate of N1.40 and consensus’ N1.48.
However, reacting to the results, analysts at Cordros Capital Limited said the bank’s annualised earnings per share(EPS)) of N1.96, outperformed both their estimate of N1.40 and consensus’ N1.48.
“Return on average equity (ROAE) remained
at the 20 (recorded in FY’15), outperforming our forecast of 14.8 per
cent. The outperformance may be attributed to positive surprises on the
banks cost’s lines: interest expense (-26.4 per cent), operating expense
(-1.5 per cent) and loan loss charges (57.2 per cent),” they said.
The analysts noted that net interest income increased by 11.8 per cent from the previous year and was roughly in line with their estimate.
The analysts noted that net interest income increased by 11.8 per cent from the previous year and was roughly in line with their estimate.
The low interest environment had a
greater impact on both the interest income and interest expense lines
than we had estimated. Interest income fell by 6.4 per cent (7.0 per
cent behind our estimate) as loans grew by only 1.2 per cent while
interest expense slumped by 26 per cent (16.5 per cent behind our
estimate),” they said.
The analysts said non-interest income fell by 25 per cent, and came roughly behind their estimate (6.4 per cent variance).
The analysts said non-interest income fell by 25 per cent, and came roughly behind their estimate (6.4 per cent variance).
“The decline was majorly as a result of a
slump in net trading income (-71.1 per cent) which was impacted by a
drop in foreign exchange income. Importantly, fee income remained
resilient, as a 45.1 per cent rise in other fees muted the impact of a
55.1 per cent decline in account maintenance fee charges,” they added.
The noted, however, that UBA continued to outperform in terms of asset quality, with a reversal on collective impairments contributing to a 57.2 per cent slump in loan loss charges, significantly deviating from their estimate (-66.8 per cent).
The noted, however, that UBA continued to outperform in terms of asset quality, with a reversal on collective impairments contributing to a 57.2 per cent slump in loan loss charges, significantly deviating from their estimate (-66.8 per cent).
“Operating expense declined by 1.5 per cent, driven by a reduction in personnel costs.
PBT declined by 1.7 per cent while a lower effective tax rate (-173 bps) pushed after tax earnings up,” they said.
PBT declined by 1.7 per cent while a lower effective tax rate (-173 bps) pushed after tax earnings up,” they said.
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