United Bank for Africa (UBA) Plc has released its financial results for the half year ended 30 June 2025, posting a pre-tax profit of N388.4 billion.
The figure marks a slight decline of 3.28% compared with the N401.5 billion recorded in the same period last year, but analysts note it remains a strong showing given the challenging operating environment.
The bank’s resilience was underpinned by robust top-line growth. Interest income surged 32.89% year-on-year to N1.3 trillion, compared with N1 trillion in H1 2024. Treasury bills contributed the lion’s share at N366.4 billion, followed by term loans to corporates at N319 billion. Bonds under investment securities generated N279.2 billion, while cash and bank balances added N113.2 billion. Interest on loans and advances to banks provided a further N105.6 billion.
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On the cost side, however, interest expenses climbed sharply to N560.6 billion from N328.9 billion a year earlier. Even with that spike, net interest income still rose 14.59% to N773 billion, up from N674.6 billion. After accounting for an impairment charge of N35.1 billion, net interest income stood at N741 billion, a 20.61% improvement from the prior year’s N614.4 billion.
Fee-based income remained largely flat. Net fees and commission income inched up 1.34% to N147 billion, compared with N145 billion in H1 2024.
Rising Costs Pressure Bottom Line
The results showed operating costs eroded profitability. Net trading and foreign exchange activities swung to a loss of N10 billion, compared with a gain of N98.1 billion in the same period last year. Employee benefit expenses surged 28.65% to N172.2 billion, while other operating expenses rose slightly by 0.19% to N312.9 billion.
These cost pressures pulled pre-tax profit down to N388.4 billion. However, post-tax profit improved 6.06% to N335.5 billion, supported by a reduction in income taxes to N52.8 billion from N85.2 billion a year earlier.
Balance Sheet Growth
UBA maintained balance sheet expansion, with total assets rising to N33.2 trillion from N30.3 trillion in December 2024. Retained earnings increased 12.85% to N1.6 trillion, underscoring continued capital strength.
Dividend Proposal and Market Response
The board of directors proposed an interim dividend of 25 kobo per share for the period ended 30 June 2025, compared with N2.00 per share in the prior year. The payout ratio edged up to 7.83% from 7.3%, but dividend yield fell sharply to 1.4% from 8.9%, reflecting both lower payout and strong appreciation in the stock price.
UBA shares closed at N47.00 on 18 September 2025, up 38.33% year-to-date on the Nigerian Exchange, signaling investor confidence despite softer profit growth.
Balancing Growth and Cost Pressures
Analysts say the coming quarters will test UBA’s ability to balance rapid growth in interest income with mounting funding costs. If Nigeria’s interest rate environment remains elevated, banks could continue to benefit from higher yields on securities and loans, but the corresponding jump in deposit and borrowing costs may squeeze margins further.
In the best potential result, UBA’s scale and balance sheet depth—total assets of N33.2 trillion—provide room to absorb higher costs, while the growth in retained earnings strengthens its capacity for future capital expansion. Continued momentum in fee-based services and digital channels could also help diversify revenue streams and reduce dependence on interest income.
A downside outcome, however, points to risks from foreign exchange volatility and operating expenses. The swing from a N98.1 billion gain in trading and FX to a N10 billion loss highlights UBA’s vulnerability to market instability. Employee costs, which jumped nearly 29%, also raise concerns about expense discipline. If cost escalation outpaces income growth, profitability could remain under pressure even as revenues rise.
Dividend sustainability is another focus for investors. The sharp reduction from N2.00 per share to 25 kobo underscores a more cautious payout strategy. Analysts say future dividends will depend on how effectively UBA manages its capital buffers while navigating regulatory and macroeconomic headwinds.
Still, with shares up nearly 40% year-to-date, the market appears to be betting on UBA’s long-term ability to leverage its pan-African network and large asset base to sustain growth, even in a high-cost environment.
- Key Highlights (H1 2025 vs H1 2024)
- Interest income: N1.3 trillion, +32.89% YoY
- Net interest income: N773 billion, +14.59% YoY
- Net interest income after impairment: N741 billion, +20.61% YoY
- Net fee and commission income: N147 billion, +1.34% YoY
- Other operating expenses: N312.9 billion, +0.19% YoY
- Pre-tax profit: N388.4 billion, -3.28% YoY
- Retained earnings: N1.6 trillion, +12.85% YoY