CBN had mandated all commercial, merchant, and non-interest banks, as well as promoters of proposed banks, to increase their capital base within 24 months starting from April 2024
The Chairman of the United Bank for Africa (UBA), Tony Elumelu, has expressed confidence that the bank will meet the Central Bank of Nigeria's (CBN) new capital requirement of N500 billion ahead of the March 2026 deadline.
This announcement follows the CBN's directive that mandates all commercial, merchant, and non-interest banks, as well as promoters of proposed banks, to increase their capital base within 24 months starting from April 2024.
The new regulations require commercial banks with international authorisation to have a minimum capital base of N500 billion, while those with national authorisation need N200 billion. Banks with regional authorisation must have a N50 billion capital base, similar to merchant banks. Non-interest banks are required to hold N20 billion for national authorisation and N10 billion for regional authorisation.
Speaking on Friday at UBA's Annual General Meeting (AGM) in Abuja, Mr Elumelu assured shareholders and investors of the bank's commitment to achieving the recapitalisation target. He highlighted UBA's strengths as Africa's global bank and emphasised its dedication to innovation, operational rigour, and shared value creation.
"UBA remains resolute in its unwavering commitment to innovation, clarity of purpose, operational rigour and, most importantly, shared value creation. We are confident that by staying true to these core principles, UBA will continue to deliver exceptional value to our stakeholders and play a pivotal role in shaping a brighter future for Africa. In terms of recapitalisation, let me assure you, my esteemed stakeholders, that we will meet the target ahead of the CBN deadline," he stated.
Despite facing challenging macroeconomic conditions, Mr Elumelu noted that UBA had achieved significant growth by focusing on geographic diversification, building resilience across business verticals, and maintaining robust risk management and cost-saving initiatives.
For the year 2023, UBA reported gross revenue of N2.08 trillion and a profit after tax of N607.69 billion, with total assets and shareholders' funds closing at N20.65 trillion and N2.03 trillion, respectively.
The shareholders approved increasing the bank's issued share capital from N17.099 billion to N22.5 billion by creating 10.8 billion new ordinary shares. The board was also authorised to cancel unallotted shares and raise additional capital through various instruments in both Nigerian and international markets.
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Group Managing Director and Chief Executive of UBA, Oliver Alawuba, reported that the bank's gross earnings grew by 143.3 percent year-on-year, driven by an expansion in the loan portfolio, higher net interest margins, and substantial contributions from foreign exchange operations.
He emphasised that UBA maintained cost discipline, with operating costs rising in line with guidelines.
A final dividend of N2.30 per share was approved, bringing the total dividend for the year to N2.80 per share, reflecting a growth rate of 16.32 percent.
KPMG Research anticipates that the CBN's initiative will strengthen the banking industry's stability and capacity, while also attracting increased investments to the sector.
Meanwhile, a Ernst and Young report estimated that 17 out of 24 banks may struggle to meet the CBN's proposed 15-fold capital increase from the current N25 billion.
The report highlighted the potential strategies for banks that may not meet the new requirements, predicting a wave of mergers and acquisitions similar to those seen during the 2004/2005 recapitalisation, which reduced the number of banks from 89 to 25.
Despite these challenges, the report said that Nigerian banks remain largely safe and resilient as of 2023.
