United Bank for Africa (UBA) has announced its audited financial results for the full year ended December 31, 2024, reporting a post-tax profit of N766.5 billion, representing a 26.14% increase from the N607.6 billion posted in 2023.

The bank’s pre-tax profit rose marginally by 6.08% year-over-year (YoY) to N803.7 billion, reflecting steady growth despite rising operational costs and economic headwinds.

UBA’s performance is consistent with a trend seen across Nigeria’s banking sector, where major financial institutions have posted significant profits in the face of economic hardship. Much of this resilience has been attributed to foreign exchange (FX) revaluation gains, which have shielded banks from the full impact of Nigeria’s economic downturn.

Breakdown of UBA’s Performance

UBA’s interest income soared by 120.40% YoY to N2.3 trillion, up from N1 trillion in 2023. A significant portion of this income came from treasury bills (N678.4 billion), term loans to corporates (N569.1 billion), and bonds (N449 billion). Additional revenue sources included loans and advances to banks, overdrafts to corporates, and other lending channels.

The bank’s interest expenses surged by 128.18% to N839.2 billion, reflecting the higher cost of funds and the increased competition for deposits. A substantial part of these expenses stemmed from customer deposits, which accounted for 54.4% of the total interest cost.

However, UBA recorded a net interest income of N1.5 trillion, marking a 116.35% YoY increase from N707.5 billion in the previous year.

Another area of significant growth was in fees and commission income, which rose 91.66% YoY to N589 billion, driven largely by the expansion of UBA’s digital banking and electronic payment services. Electronic banking fees alone contributed N236.3 billion, underscoring the bank’s strategic focus on digital transformation.

However, fees and commission expenses also saw a sharp rise, jumping 97.88% to N233.9 billion, up from N118.2 billion in 2023. This increase was mainly due to higher transaction processing costs and regulatory charges.

One of the few areas where UBA posted a decline was in net trading and foreign exchange gains, which dropped 72.43% to N181.7 billion, compared to N659.2 billion in 2023. The bank’s reduced FX earnings indicate that despite benefiting from exchange rate adjustments earlier in the year, its forex position was less favorable in the latter months of 2024.

On a positive note, other operating income rose by 37.68% to N46 billion, fueled by dividend income (N16.8 billion) and other income sources (N28.2 billion).

Pre-tax profit, Dividend Payout, and Shareholder Returns

UBA’s pre-tax profit stood at N803.7 billion, a 6.08% increase from the N757.6 billion recorded in 2023. After accounting for taxes, the group’s post-tax profit climbed to N766.5 billion, representing a 26.14% increase YoY.

The bank also announced a final dividend of N3.00 per share, bringing the total dividend for 2024 to N5.00 per share. This payout is subject to withholding tax and will be disbursed to shareholders whose names are listed in the Register of Members as of the close of business on April 11, 2025.

Earnings per share (EPS) rose 24.24% to N21.73, up from N17.49 in the previous year, signaling stronger shareholder value creation.

Balance Sheet Growth and Asset Expansion

UBA’s total assets surged to N30.3 trillion, a 46.82% increase from N20.6 trillion in 2023. This expansion was driven by growth in investment securities, higher cash reserves, and an expanded loan book.

The largest asset component remained investment securities, which accounted for N12.535 trillion, followed by cash and bank balances totaling N8.1 trillion. Loans and advances to customers increased to N6.9 trillion, reflecting UBA’s continued efforts to support lending despite economic uncertainties.

Meanwhile, the bank’s total equity rose by 68.39% to N3.419 trillion, further solidifying its financial strength. Retained earnings also increased significantly by 54.92% to N1.4 trillion, indicating a healthy capacity for reinvestment and future expansion.

FX Windfall and Banking Sector Resilience

Over the past year, Nigerian banks have capitalized on the FX windfall resulting from the devaluation of the naira and volatility in the foreign exchange market. The Central Bank of Nigeria (CBN) undertook a series of policy adjustments, including the unification of exchange rates and the liberalization of forex trading, which led to the naira’s sharp depreciation.

For banks with significant FX holdings, this translated into massive revaluation gains, as assets held in dollars surged in local currency terms. UBA, like its peers, leveraged this windfall to boost earnings, even as it faced challenges such as rising impairment charges and increased interest expenses.

Challenging Economic Realities

Despite its impressive results, UBA, like other Nigerian banks, faces growing macroeconomic challenges. The sharp rise in interest expenses and impairment charges highlights the increasing cost of doing business in Nigeria’s high-inflation environment.

Additionally, while the FX windfall provided a temporary earnings boost, fluctuating exchange rates and tighter monetary policies could limit future gains. The sharp decline in FX trading gains suggests that opportunities for banks to capitalize on forex movements may diminish going forward.

Moreover, the broader Nigerian economy continues to struggle with high borrowing costs, liquidity pressures, and fiscal uncertainty. If economic conditions worsen, banks may face higher loan defaults, tighter credit conditions, and reduced consumer spending, all of which could impact profitability in the coming year.