Profit of NGX-listed UBA jumps by 154% on higher interest income
TLDR
- UBA's Q1 2024 pre-tax profit soars by 154.74% year-on-year to N156.3 billion, supported by a 129.7% surge in interest income reaching N440.8 billion.
- Despite macroeconomic challenges like inflation and forex volatility, UBA showcases resilience and growth through strong lending activities and strategic investments in securities.
- Strategic investments in bonds play a key role in fueling UBA's growth momentum amidst economic uncertainties.
UBA's unaudited financial results for Q1 2024 depict a notable increase in pre-tax profit, soaring by 154.74% year-on-year to N156.3 billion ($111.2 million). This growth is chiefly propelled by a substantial surge of 129.7% in interest income, reaching N440.8 billion.
However, this impressive performance is juxtaposed against the backdrop of macroeconomic challenges characterized by heightened inflation, elevated interest rates, and foreign exchange volatility. Despite these headwinds, UBA managed to navigate through with resilience, leveraging its strengths.
The significant growth in interest income is primarily fueled by robust lending activities and strategic investments in securities, particularly bonds. This strategic approach has contributed to UBA's ability to sustain growth momentum amidst the prevailing economic uncertainties.
Key Takeaways
Despite these positive developments, UBA, like other banks, grapples with the formidable challenge of meeting the CBN's new capital requirement. The bank still requires an additional N384 billion to comply with this requirement. The introduction of the CBN's new capital requirement has unsettled investors, resulting in a downturn in the share prices of banking stocks across the board. This regulatory change poses a significant hurdle for banks, necessitating strategic planning and capital management to navigate effectively amidst the evolving regulatory landscape.
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