INVESTMENT HIGHLIGHT
UBA (‘’The Comspany’’) released
its unaudited 9M -2015 result for the period ended September, 30 2014 on 15th
October 2014.
The Company reported a 17.32% rise in gross
earnings to N247.20billion ($1.23B)
from N210.71billion ($1.05B) YoY, which
was translated to a 44.4% surge in net income to N48.56billion ($242.78M) from N33.63billion
($168.14M) YoY.
On a quarter on quarter analysis of gross earnings
performances over the last three quarters released, gross earnings recorded its
weakest performance in Q3 -2015, declining by 4.37% to N80.26billion ($401.31M) from N83.84billion
($419.22M) in Q2-2015.
We adduce the 17% rise in the Bank’s gross earnings YoY
to the efficient deployment of the Bank’s assets in response to the rapid
policy changes of the CBN especially in the third quarter. The marked reduction in financial assets held
for trading between H1 2015 and 9M -2015 (51%) was in a reaction to the sell
down pressure encountered in the Nigerian fixed income market as a result of
the pressure on the local currency due to the steep decline in oil prices.
The bank also increased its exposure to inter-bank
lending which rose by 13% between H1 2015 and 9M- 2015 possibly to take
advantage of the spike in inter-bank rates caused by the liquidity squeeze as a
result of the implementation of the Treasury Single Account (TSA) policy which
was implemented in the twilight of the third quarter.
The bank also managed to keep operational expenses in
check comparative to its income within the review period. Operating income
widened by 21%, while operating expenses roseat a comparatively slower pace of
12%. Cost to income ratio (operating cost/operating income) consequently
dropped to 62.48% down from 67.53% YoY.
Profit before tax advanced by 35%
to N57.36billion ($286.83M)
from N42.54billion ($212.71M) YoY while
net income rose stronger by 44% to N48.56billion
($242.78M) from N33.63billion ($168.14M). The vastly stronger net income growth
compared with the pre-tax income is adduced to the reduced effective tax rate of
15.36% compared with the 20.96% effective tax provision for 9M-2014.
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