United Bank for Africa (UBA) claimed a significant 16.9% increase in net profit, reaching ₦525.3 billion for the first nine months of the year, as per the latest earnings report released on Monday. This impressive performance is largely attributed to a robust 170% rise in interest income, which soared to ₦1.8 trillion. The surge is a result of a series of interest rate hikes by the Central Bank of Nigeria (CBN) aimed at combating persistent inflation.
Since May 2022, the CBN’s monetary policy committee has increased the benchmark interest rate by 15.8%, with an 8.5% rise this year alone. These measures are part of efforts to curb rising prices that have contributed to a cost-of-living crisis in Nigeria, the continent’s most populous country. Consequently, banks have been able to increase borrowing costs, resulting in record revenues and profits.
UBA’s net interest income for the period rose to ₦1.1 trillion, up from ₦443.1 billion a year earlier. The bank also saw fees and commission income more than double to ₦392.8 billion, boosted by significant growth in e-banking income and commissions on transactional services.
However, net trading and foreign exchange income declined by 59.5%, impacted by a net fair value loss on derivatives of ₦243.4 billion, compared to a gain of ₦340 billion in the previous year.
Despite these challenges, UBA’s provision for problem loans decreased by 14.6%, indicating improved credit quality during the period.
Total operating expenses increased by 119% to ₦812.2 billion, driven by higher employee-related expenses and costs for fuel, repairs, and maintenance. Nevertheless, the bank’s profit before income tax rose by 20.2%, with profit after tax climbing to ₦525.3 billion from ₦449.3 billion.
UBA’s total assets expanded significantly, growing by over 50% to reach ₦31.8 trillion, solidifying its position as Nigeria’s largest lender following Access Holdings.
In addition, the bank experienced nearly a threefold increase in exchange differences on the translation of foreign operations, boosting its total comprehensive income for the period to ₦1.6 trillion, up from ₦886.8 billion a year earlier.
Despite these financial gains, UBA’s stock has declined by 1% this year, underperforming the NGX Banking Index, which has delivered a 3.3% return.