United Bank for Africa (UBA) Plc, the pan-African financial services group, operating in 19 African countries, has released its audited 2016 full year results, showing significant growth in gross earnings and profits, an attestation to its resilience, enhanced productivity and geographic diversification, evident in the impressive contribution from its African subsidiaries.
The Group recorded an impressive 22 percent growth in gross earnings to N384 billion, as at December 2016, from N315 billion at the end of the 2015 financial year, illustrating the Bank’s ability to grow profitability despite the difficult macro-economic environment. In addition to the rising adoption of electronic banking channels in many of the African markets, where UBA operates, the Bank leveraged its strong franchise and geographical footprint.
As reflected in the results released on March 24, 2017 at the Nigerian Stock Exchange (NSE), covering the period January to December 2016, the Group saw a significant 32 percent growth in profit before tax to N91 billion, compared to N68 billion profit recorded over the same period of 2015. UBA’s profit after tax grew by 22 percent to N72 billion, from N60 billion recorded the previous year. The performance was buoyed by considerable growth in both interest and non-interest income, as well as increasing efficiency gains from cost management initiatives. UBA’s subsidiaries outside of Nigeria are increasingly gaining market share, reinforcing the strong and impressive subsidiary contribution to the Group, estimated at one-third of profit in 2016, from a quarter in 2015 financial year.
Following the impressive performance, the Board of Directors proposed a final dividend of 55kobo, subject to the approval of the shareholders at the forthcoming Annual General Meeting, scheduled to be held on 07 April, 2017 at the Eko Hotel and Suites in Lagos. The Bank had earlier paid an interim dividend of 20k to shareholders, bringing the total dividend for the 2016 financial year to N0.75, an unprecedented yield of 13.9%, based on the stock’s unit price of N5.39 on the floor of the NSE. The results and dividend proposal justify investor confidence in the Bank, as reflected in the 20% year-to-date rally in the share price, compared to the overall market loss of 5% over the same period.
Commenting on the results, Kennedy Uzoka, the Group Managing Director and Chief Executive Officer expressed satisfaction at the resilience of the Bank, despite the macroeconomic challenges in a number of countries where UBA operates. “Given the operating environment in 2016, I am very pleased with our profitability – an impressive 32% growth in profit before tax to N91 billion – whilst we have also focused keenly on operational efficiencies, illustrated by the reduction in our Cost-to-Income Ratio.” Uzoka said.
Speaking on its outlook for the 2017 financial year, Uzoka expressed optimism, as the Bank’s pan-African operations increasingly gain critical mass across its chosen markets. “As we implement our Customer First Philosophy, we are approaching 2017 with real optimism, especially with the outlook remaining positive in many of our markets, where we benefit from our increasingly diverse revenue streams. We reiterate our pledge to delivering excellent service to our customers, and remain committed to creating superior and sustainable return for our shareholders.”
Ugo Nwaghodoh, Chief Financial Officer (CFO) of UBA Group stated the Bank extracted efficiency gains across its operations to boost profitability. He confirmed that the Bank has seen significant improvement across major performance metrics, including an improvement in the net interest margin. “Our performance in 2016 reflects the strong potential and resilience of our business. We grew top and bottom lines by 22% and 32% respectively, despite the stagflation in Nigeria, our core market. Reflecting improved balance sheet management and better value extraction, our net interest margin (NIM) improved 40bps YoY to 6.7%.” the CFO noted.
He also expressed delight at the performance of the Group’s African subsidiaries (ex-Nigeria), which contributed a third of the Group’s profits, adding that the Bank will continue to leverage innovative offerings to grow its share of the respective markets. “As we diligently execute our Customer First initiative, I am particularly upbeat on the future of business and the value creation for shareholders.” he noted.
United Bank for Africa Plc is a leading financial services group in sub-Saharan Africa, with presence in 19 African countries, as well as the United Kingdom, the United States of America and France. From a single country operation founded in 1949 in Nigeria, Africa’s largest economy, UBA has emerged as a pan-African provider of banking and other financial services, to about 11 million customers globally, through one of the most diverse service channels in sub-Sahara Africa; 632 business offices, 1,750 ATMs, some 13,500 PoS, and a robust online and mobile banking platform.
UBA was the first Nigerian bank to make an Initial Public Offering (IPO), following its listing on the NSE in1970. It was also the first Nigerian bank to issue Global Depository Receipts (GDRs). The shares of UBA are publicly traded on the Nigerian Stock Exchange (NSE) and the Bank has a well-diversified shareholder base, including foreign and local institutional investors as well as individual shareholders.
Air Fare To Rise Further, Nigeria To Lose Revenue Over Foreign Airlines’ Trapped Funds
Over a month ago, Kamil Al Awadhi, vice-president for Africa and the Middle East, International Air Transport Association (IATA), converged with journalists in Doha, Qatar, at the 78th annual general meeting and world air transport summit.
Al Awadhi’s simple task was to intimate the press on the economic positioning of the global aviation sector and other key issues critical to the association’s goals.
Clearly stated: Foreign airlines are unable to repatriate about $450 million in earnings.
Al Awadhi said as of April, a total of $1.6 billion in funds were blocked by 20 countries worldwide — with 67 percent of it tied up in 12 African nations.
But the amount blocked in Nigeria, a country currently dealing with a shortfall of foreign exchange (FX) and a dwindling reserve, is the highest in Africa.
“Nigeria alone is holding back $450 million. It is the most amount blocked by any single African country, and the amount is rising every week,” Al Awadhi had complained.
“Cash flow is key for airlines’ business sustainability — when airlines are unable to repatriate their funds, it severely impedes their operations and limits the number of markets they can serve.
More frustrating for Al Awadhi was that attempts to recover the funds have hit walls tremendously.
In fact, talks with Nigerian officials to release the funds have been a “hectic ride”, Al Awadhi said.
He warned that the position of the authorities could lead to reduced air connectivity and maybe, make Nigeria distasteful to investors.
“The consequences of reduced air connectivity include the erosion of that country’s competitiveness, diminished investor confidence, and reputational harm caused by a perception that it is a high-risk place to do business,” he added.
Barely a month after the air transport summit ended, Al Awadhi’s predictions of some consequences are already manifesting and making a scapegoat out of travellers and travel agents.
On August 15, Emirates Airlines, the flag carrier of the United Arab Emirates (UAE), said it would reduce flight operations to Nigeria over the inability to repatriate about $85 million in revenue.
“We have had no choice but to take this action, to mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria,” the airline said in a recent statement.
“As of July 2022, Emirates has US$85 million of funds awaiting repatriation from Nigeria. This figure has been rising by more than $US 10 million every month, as the ongoing operational costs of our 11 weekly flights to Lagos and 5 to Abuja continue to accumulate.”
A travel agent at the Muritala Muhammad International Airport in Lagos told TheCable that the news of the federal government’s refusal to allow access to the sum is leading to increasing restrictions imposed by airlines on tickets out of Nigeria.
He said routes originating from outside Nigeria, such as Aberdeen to Lagos or New York to Abuja, could experience restrictions.
“Several airlines no longer allow Nigerian agents to issue such tickets, so we may be restricted in the range of airlines we can offer… we believe that restrictions will be in place for some time to come,” he said.
RESTRICTIONS ON BOOKING CLASS (INVENTORY)
The source also said there are now booking class restrictions, explaining some airlines have “dramatically restricted which classes can be sold to enable them to collect more naira per seat to offset their currency exchange woes.”
Confirming the development, Susan Akporiaye, president of the National Association of Nigeria Travel Agencies (NANTA), said the restrictions, mainly on the type of tickets sold, affect travel agencies.
“We can longer sell tickets that the point of origin is not Nigeria — UK or USA to Nigeria return — for example,” she said.
“We cannot sell the cheap tickets for some airlines as it has been taken out of the system. We cannot sell tickets that does (sic) not touch Nigeria, for example, London to Washington back to London.”
Akporiaye told TheCable that some airlines have removed lower inventories from the system. This means that in the economy cabin, for instance, prices ranging from N500, 000 downward have been removed, leaving Nigerians with the “highest inventory [which] is about N1.8milion”.
According to her, airlines have stopped selling the lower inventories because they make losses from them if they have to go to the parallel market to get dollars to fund operations.
“The higher inventory is what would make them to be able to break even and still have a little spread to be able to pay their staffs,” Akporiaye said.
TRAVELLERS SPEND MORE
The combined action of restricted tickets and booking classes put pressure on travellers’ budgets. Several agents said they are only left with the highest ticket fare in a cabin as the lower ones have been yanked off.
In addition, given that people would still want to travel to any part of the world, travel agents in Nigeria would have to source such tickets from colleagues outside Nigeria on behalf of customers.
The development makes the tickets more expensive since they are domiciled in dollars or the currency of that market.
Weighing in on the matter, Sindy Foster, principal managing partner, Avaero Capital Partners, said the situation is seriously impacting everyone involved: the foreign airlines, travel agents, and passengers.
Foster argues that removing cheaper tickets from airlines’ inventories has triggered paltry sales for agents and compels people to change their travel plans.
“A lot of people have been forced to travel indirect routes as those are cheaper and to downgrade from premium classes to the economy,” Foster said.
NIGERIA LOSING OUT ON REVENUE
But the country itself is not shielded from the boomeranging effect of declining the repatriation of funds. With travel agencies buying tickets from other markets for their clients, Nigeria is, therefore, losing revenue from ticket sales.
“The revenue for us as a travel agency will not also come to us. It will go to our other colleagues in other parts of the world, doing those tickets for us. You know airlines still pay local tax to the Nigerian government,” Akporiaye explained.
“If they’re supposed to pay tax on one million tickets in a month, because of this restriction, they’ll probably pay only on 500,000. So, the government has lost income from 500,000 tickets. So, it’s a loss to the Nigerian government.”
For Foster, it does not bode well for the country as it comes at a time Nigeria is seeking foreign investment, especially in the aviation sector.
“It sends the wrong signals,” she said.
VIOLATION OF INTERNATIONAL AGREEMENT
The bilateral aviation safety agreement (BASA) is an air transport agreement between two countries that allows designated airlines to operate commercial flights, covering the transportation of passengers and cargoes.
In October 2019, when Nigeria signed one of such agreements with India, the number of BASAs the country is a signatory hit 92.
The BASA, among other provisions, allows airlines to repatriate their earnings to their countries.
Article 15 of this agreement, titled ‘Transfer of earnings’, states that; “each designated airline shall have the right to its country on-demand local revenues in excess of sums locally disbursed. Conversion and remittance shall be permitted without delay in accordance with the prevailing exchange regulations”.
According to aviation experts, the government is violating the BASA agreements by not allowing airlines access to the funds.
“Part of the BASA agreement is they should be allowed to repatriate their funds to their own country. And it’s not being done right now. So, it’s a violation,” Akporiaye said.
Akporiaye, however, noted that it is not an intentional violation as the situation is said to be caused by the shortage of FX.
“That’s why nobody is suing Nigeria for that,” she added.
Acknowledging the provisions of the agreement vis-à-vis repatriation, Foster noted that while the existence of BASA makes airlines entitled; if the country has no forex to cover the entitlement, there is nothing the airlines can do “other than adjust their operations to take that into account.”
Speaking to TheCable via text messages, Sam Adurogboye, spokesperson, Nigeria Civil Aviation Authority (NCAA), pleaded with the government to help the airlines repatriate the funds.
“We can only plead with FG and CBN to assist them to repatriate their funds,” he said.
The federal ministry of finance and the Central Bank of Nigeria (CBN) did not respond to requests for comment on the matter.
Credit: The Cable
INFLATION: We Are Doing Better Than USA, Canada – Keyamo
Festus Keyamo, Minister of States for Labour and Employment, has said that Nigeria Fares better than major countries in the world in terms of the percentage of the rising inflation rate.
Keyamo who made this statement while appearing as a guest on Channels TV Political program, Politics Today, said the nation fared better than the United States of America, Canada, Russia, Spain, and others in the way the inflation is increasing.
According to him, other countries across the world had their inflation rate increased by a percentage that is way higher than that of Nigeria.
“With what we have gone through in the last seven years, Nigeria has done well in a context of macro global economy of major countries across the world.
“The inflation rate was hovering around 13 percent in 2020 around the pandemic. Now we are doing 18 percent. Which is about five percent.
“We are better than major countries around the world like the United States of America, like Canada, like Russia, like Spain, like Germany. Go and fact-check me. I am not saying their inflation is 18 percent. I am talking about the percentage of increase. In other words, we have tried to keep inflation down more than major countries.
“In fact, Ghana is worse. Ghana did 19 percent in term of increase. Ghana inflation now is about 29 or 30 percent. We are doing 18 percent. USA, Canada, Germany, and others are hovering between 10 percent and seven percent, higher than Nigeria which is doing five percent. It could have been worse, that’s the point I’m making,” Keyamo said.
FirstBank Branch, Head Office, Not Sealed
Our attention has been drawn to the news reports online with the conflicting claims that FirstBank branch or/head office has been sealed.
Please be informed that the referenced story is a misrepresentation of the facts and misleading. Neither our branch nor head office was sealed. On the 4th of August, 2022, there was an unlawful enforcement at the Bank’s Coomassie House Branch of a garnishee order issued by a Federal High Court sitting in Abuja which order the Bank is still challenging in court.
While the Bank has taken appropriate legal steps to deal with the situation, we wish to reassure our customers of unhindered banking services and unique customer experience in all our branches and through our numerous alternative channels.
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