After interest rate increases, UBA’s quarterly profit surges 29% to N53.6 billion

After interest rate increases, UBA’s quarterly profit surges 29% to N53.6 billion, net trade and foreign exchange income surged by 74.5 percent to N26.1 billion, owing to higher yields on fixed-income securities.

United Bank for Africa (UBA) recorded a 29.1% increase in profit in the three months to March, owing to a series of rate hikes by the Central Bank of Nigeria, which boosted interest income and boosted the bottom line.

When compared to the same period last year, the pan-African lender’s interest income increased by more than half to N191.9 billion, as six consecutive higher rate adjustments by the apex bank permitted banks to charge more for loans.

To combat inflation, the CBN has raised the key interest rate six times since May, totaling 650 basis points. The benchmark rate is now at its highest level since it was implemented in 2006.

Net interest income, a measure of profitability that compares how much lenders earn from loans to how much they pay savers to keep their deposits, increased to N119.6 billion from N84.9 billion.

Similarly, net trade and foreign exchange income climbed by 74.5 percent to N26.1 billion as fixed-income securities yield surged.

UBA increased its provision for bad loans by 74%, while other operational expenditures increased by over half to N69.4 billion, fueled by a huge increase in fuel, repairs, and maintenance costs.

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For the quarter, spending on gasoline, repairs, and maintenance totaled more than N14 billion. This represents a 63.8 percent gain over the previous year.

Profit before income tax increased by 40% to N61.4 billion, while profit for the period was N53.6 billion, up from N41.5 billion in the same period previous year.

UBA’s total assets increased by 4.6 percent year on year to N11.4 trillion at the end of March.

One-third of the bank’s assets and 42% of its operating income are generated outside of Nigeria, primarily in West Africa.