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DGAP-News: ADC's banking investment, Union Bank of Nigeria (UBN), reports half-year 2014 results ++ 55% year-on-year loan book growth in core bank ++ Transformation on track delivering improvement in bank performance

August 7, 2014

DGAP-News: ADC African Development Corporation AG / Key word(s): Half Year Results ADC's banking investment, Union Bank of Nigeria (UBN), reports half-year 2014 results ++ 55% year-on-year loan book growth in core bank ++ Transformation on track delivering improvement in bank performance 07.08.2014 / 15:34 --------------------------------------------------------------------- Union Bank of Nigeria (UBN) released its half-year 2014 financial results, achieving continued profitability reflecting the positive effects of restructuring activities over the last 18 months despite challenging regulatory changes. Gross earnings at core bank level were down 5% from the same period last year reflecting a lower net interest but higher non-interest income, while profit before tax came in at NGN 6.6 billion (EUR 29.7 million) down 43% year-on-year. Net interest income at all banks in Nigeria was put under pressure during the first half of the year due to declining treasury yields, which have fallen 162bps since June 2013, due in part to a greater foreign demand for treasury bills. UBN's asset base, at the beginning of 2014, has a relatively high weighting in investment securities, which has gradually been converted into new loan growth over the course of the year. Furthermore, the cash reserve requirement (CRR) for public sector deposits raised twice by the Central Bank of Nigeria since July 2013 from 12% to 75% as of January 2014. CRR on private sector deposits also increased from 12% to 15% effective April 2014, contracting net interest income further and skewing year-on-year comparisons. As a result, UBN's net interest income totaled NGN 24.5 billion (EUR 109.9 million) at core bank, a decline of 15% year-on-year, while non-interest income increased to NGN 9.9 billion (EUR 44.6 million), up 26% from the same period last year. Net loans were up 55% to NGN 239.3 billion (EUR 1.1 billion) at core bank level. Quarter-on-quarter loan volumes were also up with a Q2 2014 growth of 18% compared to Q1 2014 as the bank shifted more of its assets from treasuries into loans. On the liability side, deposits were down 2% at core bank level, ending the half-year at NGN 472.4 billion (EUR 2.1 billion). Deposit mobilization is a key priority of UBN's transformation efforts and improved service delivery, channel management combined with optimization of the bank's branch network should start to deliver expected deposit growth in the coming quarters. Operating expenses were up by only 2% at core bank level to NGN 28.1 billion (EUR 126.0 million) versus prior year figures. Cost-to-income ratio ended the half-year at 81.6%, up from 75.2% at the same period last year. The non-performing loan (NPL) ratio remained stable, increasing from 7.2% in the first quarter to 7.3% at the end of the second quarter. Asset recoveries improved significantly with NGN 3.5 billion (EUR 15.7 million) recovered in H1 2014 compared to NGN 1.5 billion for H1 2013, which has significantly reduced net impairments and should lead to lower NPLs in the coming quarters. The bank remains very liquid, with a gross loan-to-deposit ratio of 56% at core bank level and a liquidity ratio of 48.2%, 18% above the CBN statutory minimum of 30%. UBN finished the half-year with a Capital Adequacy Ratio (CAR) of 20%, well above the regulatory requirement of 15%. Karima Ola, Member of the Management Board of ADC commented: "UBN transformation is gaining momentum and the benefits of significant investments in talent management, operational processes and technology infrastructure are increasingly being reflected in financial performance with particularly strong performance on loan growth and asset recoveries. UBN has made considerable progress on the disposal of non-core subsidiaries and is implementing changes to its operating model to enable continued focus on core banking notwithstanding the increasingly challenging regulatory environment for Nigerian financial institutions. Management remains focused on continued execution of transformation initiatives in order to create underlying conditions for sustainable profitability at UBN." The UBN results publication will be made available for download via the following link on the ADC website: www.african-development.com/en/operations/banking-operations/union-bank-of -nigeria-ubn/ About ADC ADC African Development Corporation AG (ADC) (ISIN: DE000A1E8NW9; Bloomberg: AZC.GR, www.african-development.com), is a German listed, emerging pan-African banking group. ADC has a strong footprint in Southern Africa via BancABC, a regional commercial banking platform operating in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe as well as exposure to West Africa via Union Bank of Nigeria. In addition to its banking operations, ADC has a private equity portfolio active in growth markets across sub-Saharan Africa. ADC follows an active management approach with a team of experts that comprise operational banking management, investment banking and merchant banking expertise. Contact: Investor Relations investor-relations@african-development.com T +49 69 719 12 80 119 --------------------------------------------------------------------- 07.08.2014 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: ADC African Development Corporation AG GrÜneburgweg 18 60322 Frankfurt/Main Germany Phone: +49 69 719 12 80 119 Fax: +49 69 719 12 80 115 E-mail: info@african-development.com Internet: www.african-development.com ISIN: DE000A1E8NW9 WKN: A1E8NW Listed: Freiverkehr in Berlin, DÜsseldorf; Frankfurt in Open Market (Entry Standard) End of News DGAP News-Service --------------------------------------------------------------------- 281343 07.08.2014


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