UBA released its unaudited financial results for Q1 2024 showing pre-tax profit grew by 154.74% year-on-year to 156.344 billion.
This outcome reflects the mixed nature of strengths and limitations stemming from macroeconomic challenges of heightened inflation, elevated interest rates, and foreign exchange volatility.
A further analysis of the results reveals that the Q1 impressive performance can be attributed to a combination of robust growth in interest income, primarily propelled by lending activities and investments in securities, particularly bonds.
The significant contribution of interest income from investment in securities, particularly bonds, highlights UBA’s diversified income streams.
Overall, the growth in interest income from both asset classes seems to be propelled by a combination of expansion and an increase in interest rates.
Notably, the group’s loans and advances, a key contributing factor, expanded by 39.49% to reach N7.294 trillion. Moreover, the benchmark interest rate experienced a substantial 600 basis point increase, climbing from 18.75% in Q4 2023 to 24.75% in Q1 2024.
The CBN’s new capital requirement has seemingly unsettled investors, leading to a downturn in the share prices of banking stocks.
UBA’s share price has experienced a marginal year-to-date (YtD) increase of 0.58%, which starkly contrasts with the remarkable 238% gain observed in 2023. UBA and the modest 9.16% gain in the first quarter of 2024.