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UBA: Q3 Earnings Uplifted By Higher Net Interest Income
#1
UBA: Q3 Earnings Uplifted By Higher Net Interest Income

By Cardinalstone
United Bank for Africa Plc (UBA: TP – N8.15) reported a 5.9% YoY decline in earnings to N77.1 billion in its 9M’20 result. The fall in period earnings largely reflected the impact of higher operating and impairment charges. In Q3’20, before tax earnings rose 36.3% QoQ propelled by higher net interest income and lower operating costs. A much lower effective tax rate (1.6% vs 22.2% in H1’20) implied a more than two-fold jump in after-tax earnings for the lender.
Q3’20 Highlights:
  • Net interest income rose 23.7% QoQ on higher interest income (+15.6% QoQ)
  • Non-interest income fell 37.8% QoQ, following weaknesses in net fee income (-11.2% QoQ) and net trading gains (-59.7% QoQ)
  • Operating expenses eased 17.6% QoQ, leading to a contraction in cost to income ratio to 62.4% from 71.5% in the prior quarter
  • Impairment charges declined by 29.2% QoQ, with cost of risk at 0.64%. NPL ratio was relatively flat at 5.2% vs FY’19

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