UBA Vs Union Bank: UBA in the lead


By Folakemi Emem-Akpan

Of these two banks, United Bank for Africa (UBA) is easily the bigger of the two. When it comes to revenue generation, profit retention, equity employed, and assets base, it is clearly ahead of its contemporary. While a larger size does not necessarily translate to a better productivity, UBA however led the two banks in terms of profitability for the year ended December 31 2016. Of the eight profitability ratios we examined, UBA took the lead in seven while Union Bank only managed to lead in one ratio.

Growth rates

For the 2016 financial year, both banks were able to grow their gross earnings but UBA was able to do this more significantly than Union Bank did. Turnover growth rate for Union Bank was 8.0 per cent and while that of UBA was a much higher and therefore better 21.9 per cent. This means that UBA was the winner in this regard.

UBA was also the clear winner in terms of profit growth rate. It had a pretax profit growth rate of 32.3 per cent, as compared with Union Bank’s 6.1 per cent growth rate during the course of the year.


For the 2016 year, UBA was the winner in terms of return on assets (ROA) and return on equity (ROE). It recorded an ROA of 2.6 per cent and an ROE of 16.6 per cent. Meanwhile, ROA for Union Bank for the year was 1.3 per cent, infinitesimally up from 1.4 per cent in the prior year. This means that of every N100 worth of assets deployed by UBA, N2.60 accrued to it as pre-tax profit while Union Bank recorded a lower N1.30 pre-tax profit from every N100 worth of assets employed.

As regards ROE, UBA’s ROE was 5.8 per cent, lower than 5.9 per cent recorded in the erstwhile and also lower than the 16.6 per cent UBA recorded for the same period under review.

Pre-tax profit margin

For the 2016 financial year, pre-tax profit margin (which measures a company’s ability to squeeze as much profit as is possible from turnover) for UBA was 23.6 per cent, higher than Union Bank’s own which stood at 12.4 per cent. This means that for every N100 income earned by UBA in 2016, a high N23.60 accrued to it as profit while a lower N12.40 pre-tax profit accrued to Union Bank for every N100 income earned.

Net interest margin

Net interest margin is one of the true measures of a bank’s effectiveness, as it measures effectiveness in its core banking operations. For the year, Union Bank led the two banks, recording a net interest margin of 66.3 per cent, as compared to UBA’s 62.6 per cent result.

Classified loans

Proportion of classified loans was another of the ratios in which UBA led the two banks in 2016. For the year, the portion of its entire loan stock that became classified as non-performing stood at 3.9 per cent. This result was better and lower than Union Bank’s result for 2016. For Union Bank, proportion of classified loans for 2016 was 6.9 per cent.

Capital adequacy

This was yet another ratio in which UBA came out tops, ahead of Union Bank for their 2016 financial years. UBA recorded a capital adequacy of 20.0 per cent, better than Union Bank’s 13.3 percent result. What this means is that UBA is better equipped than Union Bank in the banks’ primary business of giving out loans.

Two year-averages

In terms of averages, UBA also outperformed Union Bank, taking the lead in seven of the points examined.


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