The Group Managing Director/Chief Executive Officer of the United Bank for Africa Plc (UBA), Mr. Phillips Oduoza, has said that the bank has slowed down its aggressive expansion across the continent as it consolidates its operations in 19 different countries and meets commitments to fund large power projects in Nigeria.
He also told investors at the Reuters Africa Investment Summit that UBA’s stronger 2013 profits was largely driven by a 25 per cent surge in deposits to N2.2 trillion, from N1.8 trillion over the year, and an expansion of risk assets by N40.5 per cent.
“We were expanding very rapidly and we initially thought we would expand further in Africa, but we’ve decided to stop and focus on consolidation,” Oduoza said, adding that this was also why a proposed $500 million Eurobond had been shelved.
He added: “We have 700 branches. That’s a very large network. We’ve covered the major economies in sub-Saharan Africa.”
Moves to consolidate included getting existing branches to function more efficiently and continuing to lower its cost income ratio as it fell to 60.9 per cent last year, from 64 per cent the previous year, Oduoza said.
An exception was Angola, for which UBA was still waiting for a banking licence.
“If we get the licence we’ll definitely look at setting up,” he said.
But UBA’s non-Nigeria African business would still grow in size in the coming years, as consolidation improves margins.
“Africa outside Nigeria is currently a fifth of UBA’s business, but within the next three years it would be half, Oduoza said, adding that “We are playing in some high growth areas like infrastructure and power, which require long term funding.”
But for now, mushrooming deposits were enough to achieve this, without seeking equity or debt financing, he said.
UBA had put $500 million into power stations, all off its own balance sheet.
Phase two of expansion would be into smaller but still potentially profitable economies like Malawi and Rwanda, Oduoza said, adding that it would come at a later date.
UBA also has plans to set up an office in China to take advantage of growing Sino-African trade, he said.
Hurdles included the impact of currency volatility on cross-border transactions and a chronic skills shortage in many African countries, Oduoza said.