UBA Board Meets to Consider Audited Results, Interim Dividend

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Shareholders of United Bank for Africa (UBA) Plc are to receive an interim dividend if the plan of the Board of the bank is approved. THISDAY gathered that following the successful audit of its 2015 half year results ended June 30, the bank has notified the Nigerian Stock Exchange (NSE) about the meeting of its Board of Directors to consider the audited results as well probable interim dividend payment. With the meeting, the release of the result may be earlier than mid-September, which the management had earlier guided. Three banks, Zenith,GTBank and Access have already recommended interim dividends for their half year results.

Whilst awaiting the results, most analysts are largely positive on the earnings performance of UBA in the period, with expectation of modest double digit growth in gross earnings and profit. This expectation has been largely hinged on UBA’s 2015Q1 earnings run-rate and its asset quality, which suggests moderate impairment charge. The bank grew gross earnings and profit after tax by 22 per cent  and 35 per cent in respectively in the first quarter of the year.
More so, UBA management  hinted on improving performance of UBA Africa subsidiaries and continued focus on cost efficiency initiatives, which moderated cost growth in the first quarter to three per cent, a good feat when put in the perspective of 9.2 per cent inflation rate.

The half year results of banks have been somewhat mixed, with some banks posting positive growth numbers amid relatively weak performance of peers. Amongst several reasons, which may be responsible for the divergence in performance, two factors seem apparent- First, banks that have reported impressive performance thus far have relatively better asset quality, with less exposure to the lower-end of the market (corporate customers seems to have the ability to better manage their finances amid the macroeconomic pressures); second, whilst the liquidity squeeze in the system has negative impact on all the banks, the tier-1 banks are more liquid, thus having better headroom to manage the funding cost.

More so, the volatility in the interbank market, with ratespeaking at 50 per cent within the period, was partly positive for the tier-1 banks. It is interesting to note that tight interbank market liquidity leads to a zero sum game; where the less liquid banks pay high rates for interbank funds being provided by the relatively liquid top lenders in the industry.  thisday.