18 July 2012

Nigeria: UBA Share Price Hits 11-Month High On Results

Positive reactions and sentiments to United Bank for Africa (UBA) Plc's impressive results for the half year (H1) ended June 30, 2012 have pushed the share price to an 11-month high. UBA shares closed at N4.75 per share last Tuesday; the exact price at which it closed on August 17, 2011.

Since the bank announced the results last Tuesday, analysts have been bullish on the shares of the bank based on the impressive numbers for the H1. The stock has appreciated by 16 per cent within one week.

UBA posted a profit before tax N31.842 billion in 2012, up from N12.3 billion in the corresponding period of 2011, while profit after tax (PAT) grew by 138 per cent from N11 billion to N26.2 billion. Investment analysts from various investment banks have rated the performance very high, saying it points to the future prospects in the bank.

For instance, analysts at Citi Bank Limited, said relative to their 2012 full year forecast PAT forecast of N41.273 billion, UBA's H1 results represented 66 per cent. According to them, the bank's equity increased 15 per cent year-on-year to N199.558 billion.

"On this basis, UBA is now trading at 67 per cent of its trailing book value. The results reflect the benefits of having a highly liquid balance sheet in a positive real rate environment.

"Also, having addressed most of its back book concerns with its fourth quarter of 2011 write-offs, the improved revenue growth of the business is finally hitting the bottom-line and this is driving the out-performance. We remain buyers of UBA and expect consensus upgrades to support the shares over the near-term," they said.

Similarly, analysts at Stanbic IBTC Bank Plc said the results showed a robust growth in gross and net earnings, adding that UBA's operating efficiency continued its improving trend and as ahead of their full year expectations.

Commenting on the results last week, the Group Managing Director and Chief Executive Officer, UBA Plc, Mr. Phillips Oduoza, had said: "Our expansion into Africa had reached a consolidation stage and the management of UBA had shifted its focus from expansion, to maximising the investment in our unique footprint. What you have seen in the first half of the year, is a reflection of what our platform is capable of delivering."

According to him, despite the challenging environment, UBA is committed to delivering good returns to stakeholders.

"Our ability to significantly and continuously grow profit and reduce costs is an indication of our promise and determination to deliver good returns to all stakeholders. Our focus remains on maximising returns through our valuable branch network, continually re-engineering our product offerings and most importantly delivering consistent service quality to clients across the continent," Oduoza said.

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