United Bank for Africa Plc has explained its huge funding plans to the power, oil and gas sectors of the economy.
Speaking at a media parley at the weekend, It’s Group Chief Finance Officer (GCFO), Ugo Nwaghodoh, said the lender, which recorded Group gross revenues of N384 billion and N90.6 billion Profit Before Tax (PBT) in its 2016 financial result, prioritises funding to sectors with biggest impact on customers’ businesses and economy.
He said the lender positioned its credit portfolio across geography, industrial sector and limits. “There are sectors we do not play at all as matter of policy. We are very strong in oil and gas and our portfolio in this sector is about the largest. We are also strong in agriculture. We also have a healthy portfolio in power and manufacturing and space,” he said.
Nwaghodoh added: “We lend to power sector because we believe that if power is gotten rightly, manufacturing base of the country will improve. We also believe that if the country gets power right, even our own business will be better. We do business with the mindset of promoting the economy.”
The GCFO commended the performance of the bank, despite the ongoing economic recession in the country, adding that its subsidiaries in key African countries played key roles in the performance.
He said the bank is currently reaping from diversification efforts in many African countries.
“UBA Africa today contributes a third in both revenues and profit of UBA Group. Our Ghanaian operation can stand side by side of some of the banks in Nigeria today in profit contributions,” he disclosed.
“In Africa, the International Monetary Fund sees significant growth in this current year and many of the African markets. Gross Domestic Product growth is forecast at six per cent in Kenya, Tanzania and 5.5 per cent in Uganda. With this type of growth, financial services industry is well positioned to support the market and make a lot of profit from these economies”.
He said UBA was upbeat about African business and believed that with what it is doing in the continent, it should be able to achieve more as a group, in the years ahead.
“We are supporting key sector of African economies. So, there are markets where we are supporting significant businesses in oil and gas, infrastructure and agriculture. Some of these markets are commodity-rich countries, and are agriculture-rich countries and these are the key drivers in those economies. We always ensure that we play prominently in key sectors of every economy where we operate,” he said.
Explaining further, he said if a bank is not playing in the agriculture space in Burkina Faso, such lender is obviously not going to do a substantial business in that country.
“Burkina Faso is one of the world’s largest exporters of cotton. If you do not play in the key sector and support the cotton campaign, you cannot be strong in that country. We are also introducing electronic banking solutions in some of these markets. We are driving financial inclusion and helping to develop electronic payment space and these are helping the growth of our business in Africa,” he said.
He continued: “A lot of the growth we recorded in 2016 mainly came from interest income, and non-interest income. We saw a lot of growth in our assets and improvements in earning assets yields. Our improvements in yields came from better treasury rates, and loan pricing.
They helped to improve our net interest margin and income, within the period,” he said.
He added: “In our non-interest income, we will continue to improve our transaction volume, and play significantly in electronic banking operations by improving on the channels of transaction. We also want to reach our customers through different channels. We are pioneering the move away from brick and mortal banking and focusing on moving with the times.”
Head, Investor Relations, UBA, Abiola Rasaq, said the bank’s business plan was centred around the Africa, which is key to its business strategy. He said the bank was positioned to compete and provide solutions that would enable it win in the digital banking space.
“Competition is intensifying towards the digital space. We have more than five million cards and that is adding to our digital platform,” he said.