UBA delivers resilient H1 2025 results with N388.4bn profit, retained earnings Up 12.9%

By Seun Ibiyemi

United Bank for Africa (UBA) Plc has reported a pre-tax profit of N388.4 billion for the half year ended June 30, 2025, representing a 3.28 per cent decline from N401.5 billion recorded in the same period of 2024.

Despite the dip, the results were considered resilient, reflecting strong top-line growth in a challenging operating environment marked by rising funding costs.

Revenue Growth Cushions Headwinds

UBA’s performance was driven by robust interest income, which surged 32.89 per cent year-on-year to N1.3 trillion from N1 trillion in H1 2024. Treasury bills contributed N366.4 billion, corporate term loans generated N319 billion, and bonds under investment securities brought in N279.2 billion. Cash and bank balances added N113.2 billion, while loans to banks yielded N105.6 billion.

Net interest income rose 14.59 per cent to N773 billion from N674.6 billion, despite higher funding costs. After impairment charges of N35.1 billion, net interest income stood at N741 billion, up 20.61 per cent from N614.4 billion last year.

However, fee-based income remained subdued, with net fees and commissions inching up just 1.34 per cent to N147 billion compared with N145 billion in H1 2024.

Rising Costs Pressure Margins

Profitability came under pressure from surging expenses. Interest costs jumped to N560.6 billion from N328.9 billion a year earlier. Employee benefit costs increased 28.65 per cent to N172.2 billion, while other operating expenses rose slightly to N312.9 billion.

Net trading and foreign exchange activities recorded a loss of N10 billion, against a gain of N98.1 billion in H1 2024, reflecting market volatility. These factors trimmed pre-tax profit to N388.4 billion.

Nevertheless, post-tax profit grew 6.06 per cent to N335.5 billion, supported by a lower tax expense of N52.8 billion compared with N85.2 billion last year.

Balance Sheet Expansion and Capital Strength

UBA maintained balance sheet growth, with total assets climbing to N33.2 trillion from N30.3 trillion in December 2024. Retained earnings rose 12.85 per cent to N1.6 trillion, underscoring the group’s capital resilience.

The board proposed an interim dividend of 25 kobo per share, down sharply from N2.00 in the prior year. While the payout ratio improved slightly to 7.83 per cent from 7.3 per cent, dividend yield dropped to 1.4 per cent from 8.9 per cent, largely due to a rally in the bank’s stock price.

UBA shares closed at N47.00 on September 18, 2025, reflecting a 38.33 per cent year-to-date gain on the Nigerian Exchange, signaling sustained investor confidence despite softer profit growth.

Balancing Growth with Cost Pressures

Looking ahead, the bank’s ability to manage rising funding costs will be critical. Elevated interest rates continue to boost securities and loan income but are also driving up deposit and borrowing expenses.

UBA’s large balance sheet and rising retained earnings provide a buffer for expansion, while growth in fee-based income and digital channels could reduce reliance on interest income. However, risks remain from forex volatility, increasing staff costs, and expense management. The sharp cut in interim dividend reflects a cautious stance on capital preservation.

Management Commentary

Group Managing Director/CEO, Mr. Oliver Alawuba, said the results reflect the strength of UBA’s business and customer trust.

“UBA’s first-half results highlight the strength of our business and the trust our customers continue to place in us. We delivered strong double-digit earnings growth across our markets, with Profit After Tax rising year-on-year to N335bn from N316bn, underscoring the resilience of our business and the success of our strategy,” Alawuba said.

On the bank’s Rights Issuance Programme, he noted: “We have made significant progress on our capital raising programme. Phase I of our Rights Issue was successfully completed, enhancing our capital by N234.3 billion and providing a stronger buffer for growth. With Phase II currently underway, we remain firmly on track to meet new capital requirements by year-end.”

UBA’s Executive Director of Finance & Risk Management, Ugo Nwaghodoh, added that gross earnings rose to N1.61 trillion, driven by the 32.9 per cent increase in interest income. Deposits expanded 11.9 per cent to N27.5 trillion, supporting balance sheet growth to N33.3 trillion, while shareholders’ funds rose 23.3 per cent to N4.22 trillion. He emphasized that the group’s capital adequacy and liquidity ratios remain well above regulatory thresholds.

Outlook

UBA’s second-half performance will hinge on its ability to balance strong income growth with rising cost pressures. Elevated interest rates may continue to drive loan and securities income, but deposit costs could squeeze margins.

Its growing asset base and capital buffers provide room for expansion, while digital banking and fee-based services could diversify earnings. However, risks from forex volatility and rising personnel costs remain.

Dividend sustainability will also be closely monitored following the sharp interim cut. Still, investor sentiment is positive, as shown by the bank’s 38 per cent stock rally, reflecting confidence in its long-term resilience and pan-African scale.