United Bank for Africa is riding the positive waves in the stock market with its entry into elite group of companies with a market capitalisation of over N1 trillion, writes Assistant Business Editor, COLLINS NWEZE.
The equities market have always served as a major barometer for the economy. In an extension of their impressive performance in recent years, Nigerian equities closed last year, gaining 46.6 per cent or N13 trillion.
This means that the market value of equities improved by almost half when set beside that of 2022. The positive trend resumed in 2024.
The local bourse ended last week on a positive note as NGX-ASI saw a gain of 8.3 per cent to print at 102,401.88 points, lifting the year-to-date return to 36.9 per cent. As a result, market capitalisation increased N4.3 trillion to N56 trillion.
The top traded stocks by volume were TRANSCORP (273.5 million units), UBA (178.8 million units) and ACCESSCORP (128.9 million units), while UBA (N5.4 billion), DANGSUGAR (N5.1 billion) and TRANSCORP (N4.7 billion) led in terms of value.
As seen above, UBA was one of the quoted companies lifting the market performance.
For the board and management of UBA Plc, the best way to start a new operating year is by sending the right signals to the stakeholders and its competitors that it has all it takes to sit atop of the banking ladder in Nigeria and Africa.
This is because last Monday, the bank, joined the elite group of companies with a market capitalisation of over N1 trillion just as its share price value hit N29.90 per share.
At the close of trading last Monday, the bank’s market capitalisation hit N1,022,562,698,843, making it the third most capitalised financial institution in Nigeria, a remarkable lift from N283.8bn at the beginning of 2023.
With 34,199,421,366 shares in issue, UBA’s N1trillion market capitalisation mark comes amidst the bank’s share being named as the highest-performing stock in the banking sector in 2023, which underscores the bank’s robust growth trajectory and unwavering market confidence.
Surpassing the monumental milestone of a N1 trillion market capitalisation, UBA Plc emerges as an unstoppable force, a testament to its dedication and outstanding performance in the financial realm. Named the best-performing bank in Nigeria for 2023, this achievement not only cements UBA’s position as a trailblazer but also underscores its exceptional prowess in navigating the dynamic landscape of banking.
Financial industry observers said the resplendent growth of market capitalisation stands as a beacon of UBA’s unparalleled success, reflecting the culmination of innovative strategies, customer-centric approaches, and an unyielding commitment to excellence.
According to them, this remarkable feat not only signifies financial prosperity but also symbolises the trust and confidence bestowed upon UBA by its customers and stakeholders, solidifying its standing as a pinnacle of success in Nigeria’s banking sector.
Making it into the SWOOT Category
At the close of trading on January 8, the share price of UBA crossed N29.90, taking the bank’s market capitalisation to N1.02 trillion, making the bank the latest member of the SWOOT category.
Companies with over N1 trillion market cap in the NGX are categorized as SWOOTs (Stocks worth over one trillion Naira). Current members of the category include MTN Nigeria, Airtel Africa, Dangote Cement, BUA Foods, BUA Cement, GTCO Holdings, Zenith Bank, and Seplat Energy.
Analysts explained that last year had been a splendid year for UBA, becoming the most profitable bank in Nigeria in 2023, with a Shareholders’ Fund that has grown from N992billion as of Full year 2022 to N1.8trillion as of September 2023. UBA was also appointed as the Local Arranger and Local Depository Bank for the $3.3bn FX Liquidity support facility for Nigeria in partnership with Africa Export and Import Bank (Afreximbank), providing solutions to economic solutions in Nigeria characterised by a shortage of Fx liquidity.
Likewise, in 2023, UBA won the 2023 FMDQ Gold Awards in three categories including the Best FX Liquidity Provider; Dealing Institution of the Year and Best Money Market Liquidity Provider. This recognition is a testament to UBA’s impressive capital strength.
UBA is a leading Pan-African financial institution, offering banking services to more than 25 million customers, across 1,000 business offices and customer touch points in 20 African countries. With a presence in New York, London, Paris, and Dubai, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance and ancillary banking services.
Dominating African continent
Analysts that have been following the positive trajectory of UBA Plc said the bank was able to cross the N1trillion mark with a demonstrable top-of-the-range performance having excelled in eight countries where it has offices last year. It could be recalled that UBA was named the ‘African Bank of the Year’ at the 2023 Bankers Awards organised by The Banker Magazine — a publication of the Financial Times of London. UBA Group won nine awards at the event.
Dominating the African continent, UBA not only clinched the title of African Bank of the Year at the event but also propelled its subsidiaries to victory in eight additional African nations.
The bank’s subsidiaries in Cameroon, Chad, Ghana, Cote d’Ivoire, Mozambique, Congo, Sierra Leone, and Tanzania emerged as the Bank of the Year in their respective countries.
It would be the second time in the past three years that the bank has won the regional award as the best bank in Africa, after winning the title in 2021.
The bank’s Group Managing Director, Oliver Alawuba, said the recognitions come as a reassurance that the bank is on track in its goal of consolidating its leadership position in Africa and creating superior value for its stakeholders.
As evidence of its impressive showing, the bank grew its revenue by 115.2 per cent to N1.31trillion in the first nine months of 2023, from N608billion recorded within the same period in 2022.
Its operating income for the period under review also rose by 146 per cent from N414bn in September 2022 to N1.02tn in 2023, while its profit after tax rose by 287.18 per cent to N449.30billion, from N116.04bn in 2022, surpassing its annualised return on average equity for Q3, 2023 at 131 per cent to 44.37 per cent.
Specifically, between January, last year and this year, the price of UBA shares has appreciated by over 250 per cent from N7.60 per share.
The performance matched the trend from the previous quarters of the year where the financial institution had reported positive growth in key metrics.
Attracting foreign funding
Having demonstrated a very strong capacity, the bank recently attracted a $175 million financial package from the African Development Bank (AfDB) Group and this comprises $100 million in long-term senior debt, $50 million of trade finance medium-term senior debt and a $25 million risk participation programme.
The long-term senior debt will enhance UBA’s capacity to finance projects in Nigeria in the key sectors of infrastructure, agriculture and related value chains, as well as manufacturing, energy, and SMEs. The facility will be complemented with technical assistance from the Affirmative Finance Action for Women in Africa (AFAWA) initiative to boost access to finance and technical assistance to women-led SMEs.
Chairman of UBA Group, Tony Elumelu, said the bank’s remarkable journey in 2023 culminated with its shares being acclaimed as the highest performing stock within the banking sector, as he pointed out that this not only highlights the bank’s strategic prowess but also reflects its commitment to delivering unparalleled value to shareholders and stakeholders alike.
“As UBA celebrates these significant milestones, we would like all our stakeholders to know that we remain steadfast in our mission to drive sustainable growth, foster innovation, and create value for its diverse clientele across Africa,” Elumelu said.
“We are witnessing the impact of the business transformation drive UBA embarked on years ago and executed well. Naturally, the market has taken note of and is duly rewarding our efforts. To our stakeholders, we promise that we will continue to work harder, deliver on what we know how to do well and create impacts across geographies where we currently operate,” he further said.
“Market participants have begun to appreciate the latent capacity in UBA’s business model as the bank unlocks enormous potential in its pan-African and international operations. Its unique competitive advantage lies in people, processes, and technology.
“With Operations and offices in 24 countries and on four continents, UBA is the only African bank with deposit-taking license in the U.S. The bank’s fundamentals remain strong with impressive financial results that have continued to deliver sustainable value for its shareholders. At its current price, UBA trades at price-to-earning (P/E) and price-to-book (P/B) multiples of 2.27 and 0.59 which are a reflection of the market’s expectations of the Bank’s future growth potential,” Alawuba said.
In all, analysts see the new capitalisation threshold as a big deal, especially as it comes a few months after the Central Bank Governor, Dr Olayemi Cardoso, hinted at a positive increase in banks’ capital base.
On the exchange rate, he expressed confidence that the naira will rebound in the course of this year, thereby giving the exonomy more power to soar.
Cardoso said the expected stability in the foreign exchange market for 2024 can be attributed to the reduction in petroleum product imports and the recent implementation of a market-determined exchange rate policy by the CBN.
“This forex reform is designed to streamline and unify multiple exchange rates, fostering transparency and reducing opportunities for arbitrage. The resulting consistent and stable exchange rate will not only boost investor confidence but also attract foreign investment, elevating Nigeria’s appeal to global investors,” he said.
Chief Economist, Nigeria Economic Summit Group, Dr. Olusegun Omisakin, said decreased volatility of the exchange rate would help to support stability in inflation, which mainly affects low-income households because they have fewer resources to protect themselves.
According to the him, increased capital inflows will fortify the nation’s external reserves, establishing a robust defence against external shocks.
“This can only happen with the stability of the exchange rate. Capital inflows, comprising foreign investment, loans and remittances, elevate the reserve levels, bolstering Nigeria’s financial stability and economic resilience,” he said.
On a positive note, Nigeria’s forex reserves gained 0.2 per cent to end the week $33.4 billion due to recovery in crude oil prices.
The brent futures rose by 4.6 per cent week-on-week to trade at $82.41/bbl. Oil prices surge was buoyed by China’s 1.0tn yuan ($139.8 billion) stimulus plan and disruptions to U.S. production owing to cold weather, even as the Middle-east and Red sea conflicts linger.
