United Bank of Africa Plc (‘the Group’) recorded an 18% YoY gross earnings growth in Q1 2022, driven by a 15% YoY interest income growth to N125.08bn. Non-Interest income grew by 26% YoY to N58.83bn. Operating income grew by 16% YoY to N121.71bn. Meanwhile, the Group’s cost-to-income ratio increased by 200 basis points to 64% in Q1 2022. Therefore, the growth in profit before tax moderated. Profit before tax grew by 10% YoY to N44.48bn while profit after tax grew by 9% YoY to N41.49bn.

We believe that a repricing of yields on risk assets supported interest income growth—a trend that we have seen across major banking peers in Nigeria. With UBA, we posit that the Group benefitted from rising yields across its other Pan African markets. The Group also grew volume, reflected in the 9% YoY growth of interest-earning assets to N6.79trn.

Inflationary Environment Drive Costs Upwards

Operating expense increased by 20% YoY to N77.64bn. We link the higher expense incurred to the heightened inflationary environment and structural shift in the labour market which meant higher personnel costs. Regulatory-induced costs also contributed to the higher operating expense in Q1 2022. Nonetheless, profit before grew by a double-digit 10% to N44.84bn.


We review our FY 2022 EPS estimate to N4.00 (previous: N4.64), and now expect the Group to incur higher operating costs in the subsequent quarters of the year. We also lowered the size of the trading gains that we expect the Group to generate in FY 2022. Finally, we raised our effective tax assumption on the back of our renewed expectations of higher taxable income in our updated numbers.

We still maintain our BUY recommendation; however, our fair value estimate is now lower by 7% to N9.45 (previous: N10.16). At the stock’s market price, we estimate a 31% total return (inclusive of a 13% dividend yield).

Please follow the link “United Bank for Africa Plc Q1 2022 – Solid Outing in Q1 2022”  to view the whole report.

Thank you.

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