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United Capital Reports 72 Percent Increase in Profit After Tax in 9 Months

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United Capital - Investors King

United Capital has officially rebounded from COVID-19 negative impact following a strong financial statement report released on Friday, October 15, 2021.

The company grew revenue by 60 percent year on year from N7.07 billion recorded in the first nine months of 2020 to N11.33 billion in the nine months ended September 30, 2021.

Operating income also jumped by 64 percent to N11.08 billion in the period under review, up from N6.76 billion achieved in the corresponding period.

As expected, operating expenses grew with an increase in revenue to N4.24 billion in the nine months under review from N2.95 billion filed in the first nine months of 2020.

Profit before tax stood at N7.09 billion in the first nine months of 2021, representing an increase of 72 percent when compared to N4.12 billion posted in the same period of 2020.

Profit after tax responded positively as it jumped by the same 72 percent year-on-year to N5.97 billion from N3.46 billion recorded in 2020.

Earnings per share also grew by 72 percent year-on-year from 77 kobo in 2020 to 133 kobo in the period under review.

See other United Capital key Financial Highlights

  • Total Assets: N400.75 billion, compared to N222.75 billion as at FY 2020 (80% year-to-date growth)
  • Total Liabilities: N373.86 billion, compared to N198.32billion as at FY 2020 (89% year-to-date growth)
  • Shareholders’ Fund: N26.89 billion, compared to N24.43 billion as at FY 2020 (10% year-to date growth)

Comparing 9M 2021 with 9M 2020, the following are worthy of note:

− Total Revenue: During the period under review, United Capital’s total revenue increased by 60% year-on-year driven largely by growth in fee and commission income (+112% year-on-year) and Investment Income (+43% year-on-year).

− Cost-to-Income ratio: The company continue to maintain improvement in operational efficiency as cost-to-income ratio for the period declined by 10.25 percentage points largely attributable to the impressive growth in revenue (+64% year-on-year) relative to operating expenses (+44%year-on-year).

− PBT Margin: United Capital recorded an improvement in Profitability margin during the period under review as PBT margin increased by 7.32 percentage points to 62.60% in 9M 2021 compared to 58.33% in 9M 2020 as PBT grew by 72% year-on-year during the period under review.

− PAT Margin: PAT margin also increased, gaining 7.47 percentage points to 52.65% in 9M 2021 compared to 49.00% in 9M 2020 as PAT increased by 72% year-on-year during the period.

− Total Assets: United Capital’s total assets during the period under review grew by 80% year to date on the account of 98% increase in cash and cash equivalents and 90% growth in financial asset investment

Commenting on the company’s performance the Group CEO, Mr. Peter Ashade, said “I am pleased to inform our stakeholders that United Capital ended the third quarter of the year with another outstanding performance. We delivered an increased revenue of 60% year-onyear, PBT growth of 72% year-on-year to N7.09b and total asset growth of 80% year-to-date.

“During the period under review, United Capital successfully listed three series commercial papers worth N19.72 billion on the FMDQ Securities Exchange. The CPs were issued under the company’s N50 billion commercial paper issuance program. This has further positioned us as a company to provide a wider range of wholesale financing solutions to our clients and complement funding base and support for all our businesses.

“Another remarkable point to note was the Nigerian Stock Exchange’s reclassification of United Capital shares from Low Price Stock Group to Medium Price Stock Group in August 2021 driven by steady growth in the company’s share price over the past months due to our consistent impressive performance over the years.

“I want to assure our stakeholders that we are optimistic on sustaining this exciting performance in the last quarter of the year and beyond. We remain focused on our transformation agenda and to continue to provide best-in-class solutions to all client segments. We are also committed to deliver superior returns as we seek to always delight our shareholders.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Loans

Akinwumi Adesina Calls for Debt Transparency to Safeguard African Economic Growth

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Akinwumi Adesina

Amidst the backdrop of mounting concerns over Africa’s ballooning external debt, Akinwumi Adesina, the President of the African Development Bank (AfDB), has emphatically called for greater debt transparency to protect the continent’s economic growth trajectory.

In his address at the Semafor Africa Summit, held alongside the International Monetary Fund and World Bank 2024 Spring Meetings, Adesina highlighted the detrimental impact of non-transparent resource-backed loans on African economies.

He stressed that such loans not only complicate debt resolution but also jeopardize countries’ future growth prospects.

Adesina explained the urgent need for accountability and transparency in debt management, citing the continent’s debt burden of $824 billion as of 2021.

With countries dedicating a significant portion of their GDP to servicing these obligations, Adesina warned that the current trajectory could hinder Africa’s development efforts.

One of the key concerns raised by Adesina was the shift from concessional financing to more expensive and short-term commercial debt, particularly Eurobonds, which now constitute a substantial portion of Africa’s total debt.

He criticized the prevailing ‘Africa premium’ that raises borrowing costs for African countries despite their lower default rates compared to other regions.

Adesina called for a paradigm shift in the perception of risk associated with African investments, advocating for a more nuanced approach that reflects the continent’s economic potential.

He stated the importance of an orderly and predictable debt resolution framework, called for the expedited implementation of the G20 Common Framework.

The AfDB President also outlined various initiatives and instruments employed by the bank to mitigate risks and attract institutional investors, including partial credit guarantees and synthetic securitization.

He expressed optimism about Africa’s renewable energy sector and highlighted the Africa Investment Forum as a catalyst for large-scale investments in critical sectors.

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Banking Sector

UBA, Access Holdings, and FBN Holdings Lead Nigerian Banks in Electronic Banking Revenue

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UBA House Marina

United Bank for Africa (UBA) Plc, Access Holdings Plc, and FBN Holdings Plc have emerged as frontrunners in electronic banking revenue among the country’s top financial institutions.

Data revealed that these banks led the pack in income from electronic banking services throughout the 2023 fiscal year.

UBA reported the highest electronic banking income of  N125.5 billion in 2023, up from N78.9 billion recorded in the previous year.

Similarly, Access Holdings grew electronic banking revenue from N59.6 billion in the previous year to N101.6 billion in the year under review.

FBN Holdings also experienced an increase in electronic banking revenue from N55 billion in 2022 to N66 billion.

The rise in electronic banking revenue underscores the pivotal role played by these banks in facilitating digital financial transactions across Nigeria.

As the nation embraces digitalization and transitions towards cashless transactions, these banks have capitalized on the growing demand for electronic banking services.

Tesleemah Lateef, a bank analyst at Cordros Securities Limited, attributed the increase in electronic banking income to the surge in online transactions driven by the cashless policy implemented in the first quarter of 2023.

The policy incentivized individuals and businesses to conduct more transactions through digital channels, resulting in a substantial uptick in electronic banking revenue.

Furthermore, the combined revenue from electronic banking among the top 10 Nigerian banks surged to N427 billion from N309 billion, reflecting the industry’s robust growth trajectory in digital financial services.

The impressive performance of UBA, Access Holdings, and FBN Holdings underscores their strategic focus on leveraging technology to enhance customer experience and drive financial inclusion.

By investing in digital payment infrastructure and promoting digital payments among their customers, these banks have cemented their position as industry leaders in the rapidly evolving landscape of electronic banking in Nigeria.

As the Central Bank of Nigeria continues to promote digital payments and reduce the country’s dependence on cash, banks are poised to further capitalize on the opportunities presented by the digital economy.

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Loans

Nigeria’s $2.25 Billion Loan Request to Receive Final Approval from World Bank in June

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IMF - Investors King

Nigeria’s $2.25 billion loan request is expected to receive final approval from the World Bank in June.

The loan, consisting of $1.5 billion in Development Policy Financing and $750 million in Programme-for-Results Financing, aims to bolster Nigeria’s developmental efforts.

Finance Minister Wale Edun hailed the loan as a “free lunch,” highlighting its favorable terms, including a 40-year term, 10 years of moratorium, and a 1% interest rate.

Edun highlighted the loan’s quasi-grant nature, providing substantial financial support to Nigeria’s economic endeavors.

While the loan request awaits formal approval in June, Edun revealed that the World Bank’s board of directors had already greenlit the credit, currently undergoing processing.

The loan signifies a vote of confidence in Nigeria’s economic resilience and strategic response to global challenges, as showcased during the recent Spring Meetings.

Nigeria’s delegation, led by Edun, underscored the nation’s commitment to addressing economic obstacles and leveraging international partnerships for sustainable development.

With the impending approval of the $2.25 billion loan, Nigeria looks poised to embark on transformative initiatives, buoyed by crucial financial backing from the World Bank.

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