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UBA’s Half-Year Profit Grows By 33% to N76.2 Billion

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Africa’s leading financial institution, the United Bank for Africa (UBA) Plc has announced its audited half-year financial results for the half-year ended June 30, 2021, showing impressive growth across all major income lines and performance indicators.

The pan African financial institution delivered a 33.4 percent appreciation in its profit before tax which rose to N76.2 billion as of June 2021, up from the N57.1 billion recorded in the same period of 2020. This translated to an annualized Return on Average Equity (RoAE) of 17.5 percent as against 14.4 percent a year earlier. This feat was recorded despite the challenging business and economic environment that emerged from the slow pace of activities following the global lockdown occasioned by the Covid-19 pandemic.

The results submitted to the Nigerian Exchange Limited showed that the group’s profit after tax stood at N60.6 billion, representing a significant rise by 36.3 percent, compared with the N44.4 billion recorded in the half-year of 2020.

Similarly, gross earnings grew to N316 billion, which was a five percent increase, from the N300.6 billion recorded as of June 2020.

According to the results, at June 30, 2021, the group’s total assets crossed the N8 trillion mark as it increased to N8.3 trillion, up from N7.7 trillion at the end of the 2020 financial year. Its customer deposit also crossed the N6 trillion mark, growing by 7.4 percent to N6.1 trillion in the period under review, compared with N5.7 trillion as of December 2020.

Furthermore, the group’s Shareholders’ Funds remained robust at N752.5 billion, up from N724.1 billion in December 2020, reflecting its strong capacity for internal capital generation.

In line with the bank’s culture of paying both interim and final cash dividends, the Board of Directors of UBA declared an interim dividend of 20 kobo per share for every ordinary share of 50 kobo each, held by its shareholders.

Commenting on the results, UBA’s Group Managing Director/Chief Executive Officer, Mr. Kennedy Uzoka, expressed delight over the bank’s performance in the first half of the year.

He added: “This has been a strong first half for us, as global economic recovery exceeded expectations, creating a positive rub-off on consumer and corporate confidence, savings, and investment activities.
“We saw this positively impact our business, as we continued to leverage our key strategic levers – People, Process and Technology, and our Customer-first philosophy, to revolutionize customer experience at UBA.”

He added that the bank’s investment in the Rest of Africa (excluding Nigeria) continues to yield good results for the group.

Uzoka added: “The benefits of pan-African business diversification accruing to the Group is once again evident, with gross earnings and interest income growth of 5.1 percent and 8.3 percent respectively, despite the low yield environment in our largest market, Nigeria.

“We are making remarkable progress on our strategy that is progressively positioning UBA as the bank of choice on the continent, driven by our emphasis on tech-led innovation and best customer experience.”

Continuing, the GMD pointed out that the bank recognizes the far-reaching effects of the pandemic on businesses globally, and remains focused on its promise to always provide our customers with the best banking experiences possible.

“Our first half 2021 (H1 2021) performance reflects our progressive efforts in building on the strong momentum that we started the year with. As a purpose-driven organization, we remain resolute in our drive for sustained growth in customer acquisition, transaction volumes, and balance sheet, as we consolidate our ‘Africa’s Global Bank’ market position in the years ahead, uplifting livelihoods across the continent,” Uzoka explained.

UBA’s Group Chief Financial Officer (GCFO), Ugo Nwaghodoh, on his part, noted that the bank’s goal was to achieve a marked improvement in earnings quality whilst maintaining positive operating leverage as well as top-notch asset quality.

“The Group recorded RoAE of 17.5 percent (from 15.1% in 2020H1) and a Net-Interest-Margin of 5.8 percent (from 5.4% in H12020) as we played the volatile yield environment diligently for the best return on our interest-earning assets.

“Capital position remained strong, with capital adequacy and liquidity ratios of 23.9 percent (22.4% in 2020H1) and 58.3 percent (58.2% in 2020H1) respectively. This is robust enough to support our growth ambitions,” he said.

The GCFO pointed out that even while the operating environment remains largely uncertain and volatile, despite marked improvement from Covid-19 induced macroeconomic stress, UBA will continue to build resilience through its geographically diversified business model to support headline earnings growth for the Group.

“We remain committed to our 18 percent and 15 percent respective RoAE and deposit growth guidance for FY 2021, as we continue to invest in growth opportunities across our geographies of operation, whilst managing capital and balance sheet prudently,” Nwaghodoh stated.

UBA offers banking services to more than twenty-five million customers, across over 1,000 business offices and customer touchpoints, in 20 African countries.

With a presence in the United States of America, the United Kingdom, and France, 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.

BIG STORY

Nigeria’s FX Reserves To Hit $41bn As Naira Seen Sustaining Gains

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Nigeria’s foreign exchange reserves are projected to reach $41 billion by the end of the year, slightly higher than the 2024 figure, as the naira continues to strengthen, according to CardinalStone’s mid-year outlook.

The expected increase in reserves is linked to the federal government’s plan to raise $3.2 billion in the second half of the year to address certain fiscal needs. Potential inflows from portfolio investors are also anticipated to support this outlook.

“These proposed external borrowings, alongside other anticipated inflows, will likely boost the FX reserves to $41.00 billion by year-end, compared to $37.27 billion as of H1’25,” the Lagos-based research and investment firm stated in its report.

A stronger external reserve position is seen as a positive for the naira, with the firm projecting the local currency to stay within the N1,550.00 — N1,635.00 per dollar range through the end of 2025.

So far this year, Nigeria’s FX reserves have dropped by over $3.5 billion as the central bank settled around $2 billion in external obligations and continued to inject dollars into the market to sustain liquidity and stabilize the naira amid global challenges.

CardinalStone Research analysts noted that external pressures—including instability in the Middle East and new tariffs introduced by US President Donald Trump—have driven $22.83 billion in FX outflows, as investors pivot to US Treasuries and Gold.

This situation has prompted the central bank to implement a “discretionary FX framework”, resulting in the sale of $4.72 billion to counteract market distortions.

The report highlighted that the CBN’s average monthly FX intervention stood at $786.58 million, significantly below the pre-COVID average of $2.30 billion and the post-COVID level of $1.38 billion, both of which were previously used to support the naira despite broader macroeconomic weaknesses.

To control inflation, attract foreign investment, and boost the naira’s value, monetary authorities have maintained key interest rates for two consecutive sessions after increasing lending rates by a total of 875 basis points to 27.5 percent.

The analysts foresee an additional 50 to 100 basis point adjustment before the year concludes, potentially easing the burden on businesses affected by high borrowing costs.

The combination of tighter monetary policy, improved FX reserves, and more effective FX management is gradually restoring investor confidence, which had declined during previous episodes of currency instability.

Nonetheless, the forecast remains vulnerable to shifts in global oil prices, the level of portfolio investments, and how quickly fiscal consolidation efforts advance. Disruptions in these areas could negatively affect both reserves and currency stability.

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BIG STORY

Dangote Refinery To End Crude Imports By December — Bloomberg Report

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The Dangote Petroleum Refinery plans to stop importing crude oil by December 2025, aiming to replace hundreds of thousands of barrels per day of imported crude with domestic supply.

A Bloomberg report quoted Devakumar Edwin, Vice President at Dangote Industries, who oversees the 650,000-barrel-per-day facility in Lagos, saying that contracts with foreign crude suppliers will expire, allowing the refinery to shift to sourcing feedstock locally.

Edwin stated that the refinery had previously imported crude from Brazil, Angola, Ghana, and Equatorial Guinea. However, he explained that “improved relations between the refinery, local oil traders and the government will result in a steady supply of Nigerian crude.”

The report noted that in June, the plant received about half of its crude from local producers, who will be able to supply more as their foreign commitments wind down.

Edwin said, “We expect some of the long-term contracts will expire. Personally, and as a company, we expect that before the end of the year, we can transition 100 per cent to local crude.”

Data compiled by Bloomberg revealed that in June, the refinery sourced 53 per cent of its crude from domestic producers and 47 per cent from the United States.

Edwin added that the plant is currently processing 550,000 barrels of crude per day.

According to cargo allocations seen by Bloomberg News, Dangote was scheduled to receive five cargoes from the Nigerian National Petroleum Company Limited in July, with the same amount set for August. Each cargo contains nearly one million barrels of crude.

Aliko Dangote constructed the $20 billion refinery to end the export of Nigerian crude for refining abroad and the subsequent importation of refined products.

The gradual ramp-up of the refinery has already enabled Nigeria to become a net exporter of petroleum products, despite initial challenges in securing adequate domestic crude to reach its full capacity of 650,000 barrels per day. This led to the refinery relying heavily on foreign crude.

Dangote recently stated that despite a naira-for-crude deal, the refinery had been largely dependent on crude from the United States.

The refinery expects a notable increase in local crude supply over the coming months.

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BIG STORY

UBA, Wema, GTB Resume International Transactions On Naira Cards After Years Of Suspension

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Three commercial banks in Nigeria have revealed the recommencement of international transactions on their naira cards. In separate messages to customers, the United Bank of Africa (UBA), Wema Bank, and Guaranty Trust Bank (GTB) confirmed that the service is back on their naira cards. This change comes about three years after several banks halted international transactions on naira debit cards.

In a recent notice to customers, UBA stated the resumption is part of its ongoing commitment to delivering seamless and improved banking experiences. “In line with our continued commitment to providing you with seamless and enhanced banking experiences, we are pleased to inform you that all UBA Premium Naira Cards, including Gold, Platinum, and World variants are now enabled for international transactions,” the message read. “This means you can now use your Premium Naira Card for everyday payments, online shopping, POS, and ATM transactions across the world, with more ease and flexibility. If you haven’t used your card recently, now’s a great time to rediscover the convenience and prestige that comes with being a UBA premium cardholder.”

In its own statement, Wema Bank informed customers they could now “pay in dollars” using their naira cards. “Your Wema Naira Mastercard just went global! Now you can pay in dollars on all your favourite international platforms; Amazon, eBay, AliExpress? Netflix, Spotify, YouTube,” the bank noted.

In an email to customers, GTB explained that users can spend up to one thousand dollars every quarter with its naira card worldwide. “We are pleased to inform you that you now have a quarterly limit of $1,000 on your GTBank Naira Card to pay for all your favourite things anywhere in the world,” it said. “Withdrawals at ATMs Abroad: $500 quarterly. Online and POS Transactions: $1,000 quarterly. Kindly note that the quarterly limit of $1,000 covers all transactions including ATM cash withdrawals abroad, purchases on international websites, POS payments outside Nigeria, and more.”

WHY BANKS ARE MAKING THE SHIFT

Ayokunle Olubunmi, head of financial institutions ratings at Agusto & Co, explained that the improved liquidity in the foreign exchange (FX) market encouraged banks to restart global transactions with their naira cards. “The moderating premium on the parallel market transactions and the reduced arbitrage opportunities is also responsible for the decision,” he said.

Charles Sanni, chief executive officer of Cowry Treasurers, told TheCable that the smaller spread between the official and parallel market rates likely influenced the move. He added that interest rates are very high in Nigeria, which discourages borrowing to speculate on foreign exchange. “The naira has also continued to appreciate against the other major currencies of the world. More so, there has been increased diaspora remittances based on the new policy of the Central Bank of Nigeria (CBN) on opening of accounts for non-residents, particularly Nigerians in diaspora,” he explained.

Sanni also pointed to renewed confidence in FX management by the federal government and the CBN, noting improvements in fund transfers and capital repatriation. He mentioned that factors such as an improved credit rating for Nigeria, the clearance of FX backlogs, a “new trading platform, increase in oil prices from geopolitical conflicts, and banks capitalisation” also played a role.

Between July 2022 and January 2023, several other banks had also temporarily stopped international transactions on ATMs and POS channels. The pause was due to severe FX scarcity, which posed a risk to vital sectors of the economy.

In July, Standard Chartered Bank halted international transactions on its naira visa debit card. First Bank of Nigeria (FBN), on September 21, 2022, announced it would stop international transactions on its naira Mastercard. Three months later, Guaranty Trust Bank (GTBank) suspended global payments on its naira Mastercard, and Zenith Bank followed suit on January 9, 2023.

Flutterwave, Eversend, and other fintech platforms also suspended their virtual card services for international transactions.

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