Analysts Laud UBA’s N1trn Market Capitalisation Milestone

Financial analysts have said that for the board and management of Africa’s Global Bank, United Bank for Africa (UBA) Plc, there was no other better way of sending the right signals for stakeholders than with the news that the bank has joined the elite group of companies with a market capitalization of over N1tn, just as its share price value hit N29.90 per share. Sources within the bank said with the capitalization, UBA Plc has shown that it knows what it takes to sit atop the banking ladder in Nigeria and Africa.

The bank’s N1,022,562,698,843 has made it the third most capitalised financial institution in Nigeria, a remarkable lift from N283.8bn at the beginning of 2023. With 34,199,421,366 shares in issue, UBA’s N1tn market capitalization mark comes amidst the bank’s share being named as the highest-performing stock in the banking sector in 2023, which underscores the bank’s robust growth trajectory and unwavering market confidence. Surpassing the monumental milestone of a N1 trillion market capitalization, UBA Plc emerges as an unstoppable force, a testament to its unwavering dedication and outstanding performance in the financial realm. Named the best-performing bank in Nigeria for 2023, this achievement not only cements UBA’s position as a trailblazer but also underscores its exceptional prowess in navigating the dynamic landscape of banking.

Financial industry observers said the resplendent growth of market capitalization stands as a beacon of UBA’s unparalleled success, reflecting the culmination of innovative strategies, customer-centric approaches, and an unyielding commitment to excellence. According to them, this remarkable feat not only signifies financial prosperity but also symbolises the trust and confidence bestowed upon UBA by its customers and stakeholders, solidifying its standing as a pinnacle of success in Nigeria’s banking sector.
At the close of trading on January 8, the share price of United Bank for Africa crossed N29.90, taking the bank’s market capitalisation to N1.02 trillion, making the bank the latest member of the SWOOT category. Companies with over N1 trillion market cap in the NGX are categorised as SWOOTs (Stocks worth over one trillion Naira). Current members of the category include MTN Nigeria, Airtel Africa, Dangote Cement, BUA Foods, BUA Cement, GTCO Holdings, Zenith Bank, and Seplat Energy.

Analysts explained that 2023 had been a splendid year for United Bank for Africa, becoming the most profitable bank in Nigeria in 2023, with a Shareholders’ Fund that has grown from N992bn as of Full year 2022 to N1.8 trillion as of September 2023. UBA was also appointed as the Local Arranger and Local Depository Bank for the $3.3 billion FX Liquidity support facility for Nigeria in partnership with Africa Export and Import Bank (Afreximbank), providing solutions to economic problems in Nigeria characterised by a shortage of Fx liquidity. Likewise, in 2023, UBA won the 2023 FMDQ Gold Awards in three categories including the Best FX Liquidity Provider; Dealing Institution of the Year and Best Money Market Liquidity Provider. This recognition is a testament to UBA’s impressive capital strength. United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than 25 million customers, across 1,000 business offices and customer touchpoints in 20 African countries. With a presence in New York, London, Paris, and Dubai, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance and ancillary banking services.

Analysts that have been following the positive trajectory of UBA Plc said the bank was able to cross the N1 trillion mark with a demonstrable top-of-the-range performance having excelled in eight countries where it has offices last year. It could be recalled that UBA was named the ‘African Bank of the Year’ at the 2023 Bankers Awards organised by The Banker Magazine — a publication of the Financial Times of London. UBA Group won nine awards at the event. Dominating the African continent, UBA not only clinched the title of African Bank of the Year at the event but also propelled its subsidiaries to victory in eight additional African nations. The bank’s subsidiaries in Cameroon, Chad, Ghana, Côte d’Ivoire, Mozambique, Congo, Sierra Leone, and Tanzania all emerged as the Bank of the Year in their respective countries. It would be the second time in the past three years that the bank has won the regional award as the best bank in Africa, after winning the title in 2021. The bank’s group managing director, Oliver Alawuba disclosed that the recognitions come as a reassurance that the bank is on track in its goal of consolidating its leadership position in Africa and creating superior value for its stakeholders. As evidence of its impressive showing, the bank grew its revenue by 115.2 per cent to N1.31tn in the first nine months of 2023, from N608bn recorded within the same period in 2022. Its operating income for the period under review also rose by 146 per cent from N414bn in September 2022 to N1.02tn in 2023, while its profit after tax rose by 287.18 per cent to N449.30bn, from N116.04bn in 2022, surpassing its annualised return on average equity for Q3, 2023 at 131 per cent to 44.37 per cent.

Specifically, between the start of January 2023 and today, the price of UBA shares has appreciated by over 250 per cent from N7.60 per share. The performance matched the trend from the previous quarters of the year where the financial institution had reported positive growth in key metrics.
Having demonstrated a very strong capacity, the bank recently attracted a $175 million financial package from the African Development Bank Group and this comprises $100 million in long-term senior debt, $50 million of trade finance medium-term senior debt, and a $25 million risk participation program. The long-term senior debt will enhance UBA’s capacity to finance projects in Nigeria in the key sectors of infrastructure, agriculture and related value chains, as well as manufacturing, energy, and SMEs.

The facility will be complemented with technical assistance from the Affirmative Finance Action for Women in Africa (AFAWA) initiative to boost access to finance and technical assistance to women-led SMEs. Chairman of UBA Group, Tony Elumelu, said that the bank’s remarkable journey in 2023 culminated with its shares being acclaimed as the highest-performing stock within the banking sector, as he pointed out that this not only highlights the bank’s strategic prowess but also reflects its commitment to delivering unparalleled value to shareholders and stakeholders alike.

“As UBA celebrates these significant milestones, we would like all our stakeholders to know that we remain steadfast in our mission to drive sustainable growth, foster innovation, and create value for its diverse clientele across Africa,” Elumelu said. “We are witnessing the impact of the business transformation drive UBA embarked on years ago and executed well. Naturally, the market has taken note of and is duly rewarding our efforts. To our stakeholders, we promise that we will continue to work harder, deliver on what we know how to do well and create impacts across geographies where we currently operate.” he further said.

According to the bank’s group managing director, Olisa Alawuba, “Market participants have begun to appreciate the latent capacity in UBA’s business model as the bank unlocks enormous potentials in its pan-African and international operations. Its unique competitive advantage lies in people, processes, and technology. With Operations and offices in 24 countries and on 4 continents, UBA is the only African bank with a deposit-taking licence in the USA. The Bank’s fundamentals remain strong with impressive financial results that have continued to deliver sustainable value for its shareholders. At its current price, UBA trades at price-to-earning (P/E) and price-to-book (P/B) multiples of 2.27 and 0.59 which are a reflection of the market’s expectations of the Bank’s future growth potentials,” Alawuba said. In all, analysts see the new capitalization threshold as a big deal especially as it comes a few months after the new Central Bank governor, Dr Olayemi Cardoso hinted at a positive increase in banks’ capital base.