The United Bank for Africa (UBA) has recently pursued the approval of the Nigerian Exchange Limited (NGX) for a significant rights issue that aims to bolster its capital base. According to a market bulletin released by Godstime Iwenekhai, the Head of Issuer Regulation Department at NGX RegCo, UBA applied through its stockbrokers, United Capital Securities Limited. The rights issue entails the issuance of an impressive total of 6,839,884,274 ordinary shares, valued at 50 Kobo each, at an offering price of N35.00 per share. This structure is based on a ratio of one new ordinary share for every five shares held by shareholders as of the close of business on November 5, 2024. Such a substantial rights issue represents UBA’s proactive approach to capital management as it aims to further strengthen its financial position in a competitive market.
In the latest trading sessions, UBA’s shares experienced a volatile performance on the Nigerian Exchange, fluctuating between a high of N35.05 and a low of N29.00. On Wednesday, the shares closed at N31.55, reflecting a significant decline of 9.99 percent. This activity on the exchange indicates a heightened level of investor interest in UBA’s shares, coinciding with the announcement of the rights issue, which may have played a role in influencing trading patterns. The recent fluctuations highlight the dynamics of the stock market and suggest potential investor reactions to the bank’s strategic decisions, including its efforts to raise capital through the rights issue.
The bank’s financial performance has shown remarkable improvement, as indicated in its third-quarter results for the year. UBA reported an impressive year-on-year growth in gross earnings, which surged by 83.2 percent, reaching N2.39 trillion compared to N1.31 trillion in the same quarter of 2023. This substantial growth is reflective of UBA’s ability to capitalize on opportunities in the financial sector, driven by its diversified portfolio and effective operational strategies. Moreover, in the same period, UBA’s net interest income soared to N1.10 trillion, representing a dramatic 149 percent increase compared to N443 billion recorded at the end of the third quarter in 2023. These figures paint a positive picture of the bank’s profitability trajectory in a challenging economic landscape.
Another notable highlight from UBA’s third-quarter results is the growth in profit before tax, which rose by 20.2 percent to N603.48 billion, up from N502.09 billion in the corresponding period in the previous year. Similarly, profit after tax experienced a notable increase of 16.9 percent, reaching N525.31 billion compared to N449.26 billion recorded a year earlier. Such profitability strengthens UBA’s position as a key player in the banking sector and reflects its effective measures undertaken to enhance operational efficiency as well as customer satisfaction. This upward trend in profitability underscores UBA’s resilience and capacity to navigate fluctuating market conditions while maintaining operational effectiveness.
In terms of overall assets, UBA reported a remarkable increase, positioning the total assets at an impressive N31.80 trillion. This figure represents a 54.0 percent year-on-year rise from N20.65 trillion recorded at the end of December 2023. The substantial growth in assets speaks to UBA’s strategic initiatives to enhance its financial stability and expand its market presence. Furthermore, total deposits surged to N26.50 trillion, reflecting a significant 52.7 percent rise from N17.355 trillion at the end of the last financial year. The increase in deposits can be attributed to UBA’s commitment to improving customer experience through technology-led initiatives and innovative banking solutions adopted over the past few years.
In summary, UBA’s recent efforts to secure approval for a rights issue, coupled with its impressive financial performance, demonstrate the bank’s strategic foresight and commitment to growth. The fluctuations in its share price and the significant uptick in gross earnings, net interest income, and profitability highlight UBA’s resilience and operational effectiveness in a competitive banking environment. As the bank continues to leverage technology and customer-centric strategies, it positions itself for sustained growth and stable financial performance, thereby reinforcing its status as a leader in Africa’s banking sector. The successful implementation of the proposed rights issue could further enhance UBA’s capital structure, enabling it to seize future growth opportunities amid evolving market conditions.
