UBA Plc released its 2015 Q1 results showing Gross Earnings rose year on year 22% to N83billion. The bank also reported Net Interest Income rose 5% year on year to N30.7billion. Pre-tax profits which is the major indicator for interim results released by companies was also up year on year 35% to N18.3billion.
However, to our surprise UBA introduced a new indicator in “annualized earnings per share” which in all modesty Nairametrics hasn’t heard of before. As our readers must be aware by now, Nairametrics places a lot of emphasis on earnings per share as that is basically an indicator of what the bank or indeed any company has actually made for shareholders of the company .
Typically earnings per share is calculated as the profits attributable to shareholders of a company divided by the number of outstanding shares in the company. However, by annualizing it, UBA has multiplied that figure by four. Annualising returns or profits or earnings is not a new thing as it gives investors sneak peak of what a periodic portion of a profit could be where it to be annual. For example, it in a year made up of four quarters you make an earnings per share of N1. Annualising it will mean that earnings per share is N4 (N1 multiplied by four quarters).
Whilst we don’t know why UBA used that “new formula” we can only think of one reason. Annualising a Q1 result gives an impression that the bank’s Q1 result is perhaps an indication of what could happen assuming it is the end of the full year. Whether it complies with IFRS requirements or not is probably subject to conjecture for now we can only just bask in a new formula.
In addition, like this results and will be looking forward to their half year results.