UBA just released First Quarter, 2016 results which saw flat profits for the period (N16.95 bn in 2015 vs. N16.98 bn in 2016).
Total comprehensive income from the period for Shareholders however fell 7.7 percent to N14 bn from N15.2 bn in the 2015 period.
Nigerian banks are dealing with a tough macro environment due to a slide in oil prices, the fixed FX regime and slumping growth which is pushing up non performing loans.
Here are what we liked from UBA’s numbers:
Higher Fee Income
UBA managed to report increased fee and commission income, despite the central bank regulations (on COT and ATMs among others) which has been putting a pressure on this source of revenue.
The lender’s fee and commission increased 12.5 percent to N15.2 bn from N13.5 bn
Reduced Impairment Losses
UBA reported a lower net impairment loss on financial assets between 2015 and 2016.
This fell 56.5 % in the period from N2.3 bn to N1 bn.
Reduced Personnel And Other Expenses
UBA is managing to hold a line on its costs which had been a problem historically.
The lender reported reduced personnel expenses for the period to N13.8 bn from N14 billion
Other operating expenses also fell to N16.3 bn from N16.6 bn.
Lower Interest Expense
UBA reported lower interest expense and must have knowingly shifted the mix of its deposit liabilities that it pays interest on to achieve this.
For the period interest paid on deposits from customers fell by 31 percent to N14.5 bn from N21.1 billion in Q1 2015.
Total interest expense fell to N20.5 bn from N27.8 bn for the period.
Banks are operating in a very tough environment which is highlighted daily here on Naira-metrics.
We believe UBA is on the right track as it cuts costs, holds the line on bad loans and improve fee and commission income.
The upside from the bank and its stock could be huge when the economy turns.