(Ecofin Agency) - United Bank for Africa (UBA) ended 2018 with a drop in its shareholders’ equity. Its report revealed that the period under review ended with NGN483.4 billion equity, a 5.1% decrease compared with the NGN509.5 billion recorded during the 2017 fiscal year.  

According to the group, this is due to the new financial standard IFRS9. The group’s figures indicate that this negative performance was due to the “other reserves” item. As the bank operates in many markets, some of which have not adopted the IFRS9 standard yet, it is obliged to set additional reserves for risk hedging. The equity allocated to such coverage dropped by half without a clear explanation.  

The effective gain of its shareholders was NGN45.3 billion in 2018, against NGN105 .3 billion in 2017. In addition, its revenues from credit activities slightly decreased to reach NGN205.6 billion. Its interest income was just NGN4.5 billion against NGN35.8 billion at end 2017.

The rise in its commission earnings was diluted by higher administrative costs and a decrease of investment earnings but, the group’s executives are confident in its future. “With much optimism, we expect a more gratifying 2019 for our shareholders as we exploit our resources further and optimize our efficiency to obtain higher yields,” Kennedy Uzoka, one of the group’s executives, indicated.

Despite these not so good performances, the group intends to share the same dividend per action as it did for the 2017 fiscal year (NGN0.85).

The market seems happy with the dividend announcement. UBA’s share started the trading week with a rise. Let’s note that apart from Heirs Holding, controlled by Nigerian billionaire Tony Elumelu, UBA has many institutional investors in its capital.

Idriss Linge