UNITED CAPITAL PLC – Solid Earnings Momentum and Balance Sheet Expansion Underscore Strong Q3 2025 Performance

Strategic Context

United Capital Plc delivered a resilient performance for the nine months ended 30 September 2025, reflecting robust earnings growth, sustained profitability, and a significantly strengthened balance sheet. The Group’s results highlight its ability to navigate a dynamic macroeconomic landscape marked by elevated interest rates, tighter liquidity, and fluctuating market yields.

Supported by its diversified business model spanning investment banking, asset management, trust services, and securities trading, United Capital continues to consolidate its leadership in Nigeria’s non-bank financial services space. The period’s performance underscores the company’s strategic agility and the success of its focus on investment income, trading gains, and strong cost discipline.

Earnings Performance Overview

United Capital posted gross earnings of ₦41.54 billion for 9M 2025, representing a 47.5% increase from ₦28.17 billion recorded in the corresponding period of 2024. This strong performance was primarily driven by growth in investment income, fee and commission income, and an impressive recovery in trading income.

• Investment Income: ₦11.32 billion, up 34.5% YoY from ₦8.42 billion, reflecting improved yields on fixed-income securities amid a high-interest-rate environment.
• Fee and Commission Income: ₦16.54 billion, up 57.4% YoY, driven by stronger corporate finance mandates, wealth management inflows, and capital market activities.
• Net Trading Income: surged 185.3% to ₦9.74 billion (from ₦3.41 billion), benefiting from favourable market positioning and robust proprietary trading gains.

However, other income declined to a loss of ₦1.47 billion from a gain of ₦6.26 billion in 2024, largely due to valuation adjustments on certain non-core investments. Despite this, the Group’s net operating income rose 68.3% YoY to ₦37.60 billion, underscoring solid underlying earnings resilience. After accounting for total expenses of ₦18.40 billion (up from ₦11.14 billion), operating profit before tax climbed 36.0% YoY to ₦23.14 billion, while profit before tax advanced to ₦25.01 billion, representing a 33.6% YoY increase. Following a tax charge of ₦3.84 billion, profit after tax settled at ₦21.17 billion, up from ₦15.98 billion in the same period of 2024. This robust earnings growth translated to annualised basic and diluted EPS of 157 kobo, compared with 118 kobo in 2024, reinforcing the Group’s sustained value creation for shareholders.

Balance Sheet Analysis

The Group’s balance sheet remained strong and liquid, with total assets rising 9.7% year-to-date to ₦1.87 trillion (from ₦1.70 trillion as of December 2024). This growth was supported by higher investment securities, loans, and cash balances, highlighting prudent asset allocation and funding efficiency.

• Cash and Cash Equivalents: ₦474.44 billion (+40.8% YTD), demonstrating enhanced liquidity management.
• Investment Securities: ₦1.15 trillion (+1.7%), reflecting a strategic reallocation into interest-bearing assets.
• Loans and Advances: ₦66.96 billion (+13.4%), as United Capital selectively expanded its credit exposure to quality obligors.

On the funding side, managed funds rose 26.8% to ₦1.07 trillion, supported by stronger investor confidence and retail product penetration. Borrowed funds moderated to ₦357.29 billion (-12.0% YTD), indicating a leaner funding mix and improved leverage position. Shareholders’ funds expanded significantly by 72.2% to ₦229.91 billion, driven by retained earnings growth and a remarkable expansion in fair value reserves to ₦173.78 billion (from ₦84.15 billion), buoyed by mark-to-market gains on financial assets at fair value through OCI.

Strengths and Weaknesses

Strengths:

• Strong top-line momentum across core business lines (investment and trading income).
• Robust asset growth and liquidity position, supporting future expansion.
• Significant increase in fair value reserves, bolstering shareholders’ equity.
• Improved cost efficiency despite higher inflationary pressures.
• Consistent profitability and strong capital adequacy position.

Weaknesses:

• Decline in other income, reflecting non-recurring investment losses.
• Rising operating expenses (+65.1% YoY) may pressure margins if not contained.
• Continued reliance on market volatility for trading income introduces earnings cyclicality.

Outlook

Looking ahead, United Capital is poised to sustain its positive growth trajectory, supported by Nigeria’s elevated interest rate environment, continued investor demand for capital market products, and the Group’s expanding retail franchise. The company’s diversified income streams and prudent risk management framework will remain critical in defending margins amid expected market corrections and potential monetary easing in 2026.

Management’s focus on technology-driven service delivery, digital investment platforms, and regional expansion across Africa is likely to underpin long-term earnings stability and enhance non-interest revenue contribution.

Analyst Commentary

United Capital’s 9M 2025 performance reinforces its position as one of Nigeria’s most efficiently run non-bank financial institutions. The substantial earnings growth, underpinned by diversified revenue sources and disciplined balance sheet management, demonstrates its resilience in navigating a challenging macroeconomic backdrop. The surge in fair value reserves and expanded asset base not only strengthen the Group’s capital buffers but also enhance its capacity to capture future growth opportunities across investment banking, fund management, and fintech-driven distribution. While rising costs and lower other income remain short-term headwinds, the company’s overall fundamentals remain compelling. United Capital’s strong liquidity, robust profitability, and consistent shareholder return position it favourably to deliver sustained value creation in the medium to long term.