UBA Delivers Solid Q1 2025 Results Amid Rising Costs—Strong Core, Strategic Rebalancing

United Bank for Africa (UBA) kicked off 2025 with a 30.65% jump in pre-tax profit to ₦204.27 billion and a 33.15% rise in net profit to ₦189.84 billion, underlining the strength of its core banking operations and resilient income streams despite intensifying cost pressures.

🔑 Key Highlights (Q1 2025 vs. Q1 2024):

• Pre-tax Profit: ₦204.27 billion (+30.65%)
• Net Profit: ₦189.84 billion (+33.15%)
• EPS: ₦5.35 (+35.10%)
• Interest Income: ₦599.83 billion (+36.09%)
• Interest Expense: ₦247.96 billion (+77.00%)
• Net Interest Income: ₦351.88 billion (+17.03%)
• Non-Interest Income: ₦112.36 billion (+44.21%)
• Total Assets: ₦31.71 trillion (+4.58%)
• Customer Deposits: ₦22.86 trillion (+4.43%)
• Cash and Equivalents: ₦9.54 trillion (+16.89%)
• Share Price (April 23): ₦34.95 (+2.79% YTD)

📊 Profit Drivers: Core Banking Operations Hold Strong

UBA’s interest income surged by 36% YoY, reflecting sustained growth in its loan book and strong returns from investment securities. Notably:

• Investment Securities income rose 45% YoY to ₦291.86 billion, becoming the largest contributor (48.7%) to interest income.
• Loans and advances contributed ₦260.56 billion (+31% YoY), or 43.4% of total interest income.
• Income from cash balances also grew by 17% to ₦47.42 billion.

However, interest expenses jumped 77%, driven by higher deposit mobilization costs, with over 89% of those costs linked to customer and institutional funds. This compressed the net interest margin, though net interest income still posted a solid ₦351.88 billion, up 17% YoY.

🏦 Rising Provisioning, But Within Range

UBA increased its provision for credit losses by 160% to ₦18.61 billion, signaling a cautious stance amidst evolving credit risks. Though elevated, this remains manageable within the context of the bank's strong earnings capacity and asset base.

💳 Non-Interest Income: Diversification in Action

UBA continued to diversify revenue through growing fee-based income:

• Electronic banking income hit ₦47.84 billion (+7.86%), though offset by nearly ₦42 billion in associated costs.
• Account maintenance fees climbed 11.1% to ₦10.39 billion.
• Commissions on transactions dipped slightly by 2% to ₦29.67 billion.

The net result was a 44.2% boost in total non-interest income, helping cushion the impact of rising interest expenses and provisioning.

📘 Balance Sheet Insights: Leaning Into Fixed Income

UBA’s total assets rose to ₦31.71 trillion, a 4.6% increase, largely fueled by growing customer deposits (₦22.86 trillion, +4.43%) and a significant investment shift into fixed income:

• Over ₦1.2 trillion was added to securities classified under FVOCI, signaling a strategic move to capture high yields while maintaining liquidity.

Loan growth, however, contracted slightly by 1.83%, possibly reflecting cautious lending or balance sheet optimization.

📈 Market Performance & Valuation

UBA’s stock price has gained 2.79% YTD, closing at ₦34.95 on April 23, building on its 32.55% rally in 2024. Despite strong fundamentals and rising earnings per share, the share price has not fully captured the Q1 earnings momentum, indicating possible upside potential.

⚠️ Key Considerations:

Strengths:

• Solid growth in both interest and non-interest income
• Well-diversified income streams
• Prudent credit provisioning
• Strong liquidity and deposit base
• Strategic asset reallocation toward high-yield instruments

Challenges:

• Margin pressure from surging interest expenses
• Rising cost of electronic transactions
• Slight contraction in loan book could weigh on future growth
• Elevated provisioning hints at macro uncertainties.