Update shared on18 Jun 2025
Subject: Analysts Turn Bullish on UBA Plc as Q2 2025 Expectations Soar Amid Strong Fundamentals and Expansion Drive
A wave of optimism is sweeping through Broadstreet as a growing number of equity analysts revise earnings and price expectations upward for United Bank for Africa (UBA) Plc, positioning the stock as one of the most promising in the Nigerian equities space ahead of its Q2 2025 financial results.
Key Highlights:
- Market Valuation Hits N1.5 Trillion Investor appetite surged last week, pushing UBA’s market capitalization to approximately N1.5 trillion, buoyed by rising confidence in the bank’s Pan-African strategy and earnings resilience.
- Strong Upside Potential At a market price of N36.15, analysts see significant headroom for price appreciation:
- Cordros Securities: Raised its price target to N58.28/share (from N57.42), maintaining a “Buy” rating.
- Afrinvest: Forecasts a 47.5% upside with a target price of N53.09/share.
- Dividend Outlook for FY 2025 Cordros also projects a final dividend of N5.10, reinforcing investor expectations for improved shareholder returns.
- Pan-African and Global Expansion Fuel Optimism UBA’s international ambitions continue to gain traction, with plans to:
- Launch a Saudi Arabian subsidiary.
- Secure regulatory approval for its France operations in 2025, deepening its global banking footprint.
- Q1-2025 Performance Bolsters Confidence UBA posted 37.3% YoY growth in gross earnings, reflecting strong momentum in both core and non-core banking operations.
- Earnings and Revenue Forecasts Revised Upward
- Pre-tax profit expected to rise 23% to N988.8 billion.
- Gross earnings forecast revised up by Cordros to +26.7% (from +23.4%).
- EPS forecast adjusted to N21.80, with modest growth (+0.3%) impacted by an increase in share count.
- Key Drivers of Growth
- 28.2% projected growth in earning assets, supported by high interest rates.
- Expansion in non-interest income, led by fees and commissions (+26.7%).
- Lower loan forbearance (5% in 2024 vs. 20% in 2023) to drive reduced provisioning and improve cost of risk (3.0% vs. 3.2%).
- Operational Efficiency Set to Improve
- Operating income expected to grow by 25.3%, outpacing operating expenses growth of 14.8%.
- This results in an improved cost-to-income ratio of 51.1%, down from 55.7% in 2024.
Outlook
UBA’s robust fundamentals, aggressive capital deployment, and disciplined cost management have made the bank a clear favorite among equity analysts. With diversified revenue streams, an expanding international presence, and digital innovation underpinning its operations, the bank appears well-positioned for sustained growth in 2025 and beyond.
The stock remains deeply undervalued relative to its projected earnings and intrinsic worth, offering a compelling case for long-term investors seeking growth and income.
Disclaimer
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