(Ecofin Agency)

• United Bank for Africa (UBA) saw profits from its CFA zone subsidiaries (UEMOA and CEMAC) surge by 166% in 2024, reaching N259.8 billion ($169 million).

• The CFA zone now contributes 34% of UBA’s net income, up from 16% a year earlier, solidifying Francophone Africa as a key growth driver.

• Currency fluctuations, particularly the naira’s depreciation, played a major role in boosting reported earnings from UBA’s African subsidiaries.

United Bank for Africa (UBA) strengthened its position as a leading pan-African bank in 2024. Under the leadership of Oliver Alawuba, the group’s CFA zone subsidiaries (UEMOA and CEMAC) recorded a 166% jump in profits, reaching N259.8 billion ($169 million). This performance significantly boosted UBA’s overall net income, which rose 26% to N766.6 billion ($500 million).

Revenue growth followed a similar trend. Net Operating Income (NOI) from the CFA zone more than doubled, rising 115% to N482.6 billion ($315 million) from N224.3 billion ($146 million) a year earlier. Meanwhile, UBA’s total NOI increased by a more moderate 8% to N1.24 trillion ($807 million).

As a result, the CFA zone’s share of UBA’s net income climbed to 34%, up from 16% the previous year. Its contribution to NOI also grew from 20% to 39%. This shift positions Francophone Africa as a key growth engine for the bank, in contrast to weaker trends in some other regions, particularly East Africa, which has historically been more closely tied to Nigeria.

Tony Elumelu (L) et Oliver Alawuba (R)

A Longstanding Presence, Now Gaining Strength

Francophone Africa has always been a strategic market for UBA. Between 2005 and 2009, the Nigerian bank expanded into the UEMOA and CEMAC regions, opening subsidiaries in Cameroon, Côte d'Ivoire, Burkina Faso, Gabon, Guinea, and Mali. In most of these countries, UBA owns 100% of its subsidiaries, allowing for greater strategic control.

As of 2024, UBA operated 746 branches across Africa, with 131 located in Francophone countries—accounting for 17.6% of its African network. While still a smaller portion of the bank’s overall presence, these subsidiaries are playing an increasingly important role in its financial results.

Some CFA subsidiaries stand out for their profitability. UBA Cameroon led the pack with an NOI of N108.6 billion ($71 million) and a net profit of N64.4 billion ($42 million). Côte d'Ivoire followed with N55.7 billion ($36 million) in profit, while Burkina Faso posted N38.9 billion ($25 million).

Even smaller subsidiaries showed strong results. Senegal tripled its profits, Mali returned to profitability, and Congo-Brazzaville remained in the black. In contrast, East African operations struggled, with losses of N6.4 billion ($4.2 million) in Kenya and N2.7 billion ($1.8 million) in Tanzania, while profitability declined in Uganda. Only a few East African units, such as those in the Democratic Republic of Congo and Liberia, saw growth similar to the CFA subsidiaries.

Strong Results, Boosted by Currency Movements

UBA’s growth in Francophone Africa was not driven solely by improved productivity or cost efficiency. The bank acknowledged in its annual report that exchange rate fluctuations played a major role in its consolidated performance. In 2024, currency conversion differences added up to N580 billion ($378 million), the highest level ever recorded by the bank.

The depreciation of the naira against more stable currencies like the CFA franc significantly boosted the reported contribution of UBA’s foreign subsidiaries when measured in naira. According to the BCEAO, the naira lost 40% of its value against the CFA in 2024.

UBA pointed out that a 10% depreciation of the naira alone would have increased its pre-tax income by N83 billion ($54 million). This means that even if CFA-based subsidiaries maintained stable results in their local currency, their contributions in naira terms grew substantially.

When measured in naira, the strong performance of UBA’s CFA zone operations appears striking. However, when adjusted for year-end exchange rates, growth in dollar terms is more moderate—net income in the CFA zone increased by 56%, and NOI by 26%. This highlights the impact of the naira’s depreciation on UBA’s consolidated results.

In other words, a significant portion of the reported growth in the CFA zone was due to currency effects rather than an equivalent surge in business activity. At the same time, Nigeria’s economic challenges—high inflation and exchange rate volatility—reduced real growth in naira terms, making foreign subsidiaries appear even stronger in comparison. The application of IAS 29 accounting standards in hyperinflationary markets such as Ghana and Sierra Leone also led to favorable adjustments in UBA’s consolidated accounts.

Risks Remain

UBA’s African expansion hasn’t been without challenges. In 2024, operations outside Nigeria accounted for 45% of the bank’s total operating expenses—N467.9 billion ($305 million)—while contributing 39% of net revenue. The bank attributed this gap to investments in digital banking, local recruitment, and branch expansion.

Loan losses reached N55.9 billion ($36 million) across UBA’s African subsidiaries, with Côte d'Ivoire, Gabon, and Cameroon seeing higher defaults, particularly among small and medium-sized enterprises.

Tax burdens were also heavier outside Nigeria, with subsidiaries paying three times the tax rate of the Nigerian operations—more than N110 billion ($72 million) in total.

Despite these challenges, UBA continues to strengthen its fundamentals. More than 70% of the bank’s transactions are now conducted through digital channels, and its AI-powered banking assistant, Leo, is available on WhatsApp in multiple Francophone countries.

Fiacre E. Kakpo