Loss on Derivatives Drags Performance

United Bank for Africa Plc recently released its audited H1:2024 financial result. Gross earnings grew by 39.65% YoY to NGN1.37trn following impressive interest income growth. Interest Income surged by 134.32% YoY to NGN1.00trn while Non-Interest Income declined by 33.60% YoY to NGN367.49bn, an offshoot of a lower net trading and foreign exchange income. On the other side, Operating Expenses increased by 109.75% YoY to NGN474.80bn owing to employee expenses, energy, and maintenance cost. Profit Before Tax (PBT) and Profit After Tax (PAT) declined by 0.51% YoY and 16.36% YoY respectively to NGN401.58bn and NGN316.36bn consecutively. Consequently, Net Profit Margin decreased by 15.45% to 23.07% in the period.

For 2024FY, we expect improved performance on the back of higher interest income relative to
2023. The lender’s digital banking drive should also improve Non-Interest Revenue, barring any
further hit from derivative loss. We maintain our 2024FY target price of NGN29.57 for UBA and
compared to its close price of NGN27.35 as of 4th of October 2024, we put a “HOLD “rating on UBA.
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