Audited H1 2024 Results Investors Conference
Strategic Review and Outlook
Oliver Alawuba, Group Managing Director/CEO
INTRODUCTION
Dear Valued Stakeholders,
I am pleased to welcome you to our H1 2024 Financial Year Investors’ Conference. Thank you for joining us. I am Oliver Alawuba, the Group Managing Director/Chief Executive Officer of UBA Group.
As of H1 2024, the economic environment remained challenging across the regions where we operate. High inflation, rising debt levels, increasing interest rates, and tighter monetary policies have created significant pressure on economies globally. Despite these headwinds, our Bank has demonstrated resilience.
Our strong leadership, a dedicated team, supportive customers and a clear strategic direction have enabled us to achieve sustained and profitable growth. We have remained focused on navigating these challenges while upholding the ideals of Enterprise, Excellence, and Execution (3 Es).
Our commitment to these principles, encapsulated in our “EXECUTION” mantra, has brought us closer to industry leadership in several markets. Our financial performance reflects our unwavering focus on delivering value to our customers through our Customer-First (C1st) philosophy.
Before diving into our financial achievements and investments that drove our success, let me provide an overview of the broader external operating environment that shaped our activities in the first half of 2024.
EXTERNAL OPERATING ENVIRONMENT
Global Perspective: In July 2024, the International Monetary Fund (IMF) projected global economic growth at 3.2% for 2024 and 3.3% for 2025. The global economy continues to grapple with interconnected challenges, including geopolitical tensions, high inflation, and the accelerated adoption of transformative technologies like Artificial Intelligence (AI).
Compounding these are the escalating effects of climate change, all of which complicate the efforts to normalize monetary policies. Persistent inflationary pressures have raised the prospect of prolonged higher interest rates, amidst growing trade tensions and policy uncertainties. These global risks significantly influence market volatility, shaping investor sentiment and operational realities.
Sub-Saharan Africa: In Sub-Saharan Africa, growth projections for 2024 have been revised downward to 3.7% from the earlier forecast of 3.8%. Inflation is expected to ease, allowing private consumption and investment to gradually recover.
Key regional developments include:
• Political and Social Dynamics: Youth-led protests in Nairobi, Kenya, opposing the now-withdrawn 2024 Finance Bill, and the quelled #Endbadgovernance protests in Nigeria, which were spurred by economic hardship and insecurity. These events reflect growing public pressure for better governance across the region.
• West African Geopolitical Shifts: The formation of the Alliance of Sahelian States (AES) by Burkina Faso, Mali, and Niger in 2023, signalled regional re-alignments, with potential economic and political implications. Their exit from ECOWAS and possible withdrawal from the West African Economic and Monetary Union (WAEMU) could impact the stability of the regional economy. However, the February 2024 lifting of sanctions against Niger by ECOWAS is a positive step towards reducing geopolitical tensions.
• Growth in East Africa: East Africa remains Africa’s fastest-growing region, with projected growth of 4.9% in 2024. Seven economies (Rwanda, Ethiopia, Djibouti, Tanzania, Uganda, Burundi, and Kenya) are expected to grow by 5% or more. Key drivers include government investments in infrastructure, connectivity, and trade facilitation, alongside efforts to modernize agriculture and boost productivity in services.
• Southern Africa: After a slowdown in 2023, growth in Southern Africa is expected to pick up, reaching 2.2% in 2024. For Zambia, real GDP is projected to grow by 4.5%, driven by recoveries in mining, services, and manufacturing, supported by a rebound in copper prices and progress in debt restructuring under the G20 Common Framework.
Overall, Sub-Saharan Africa’s outlook remains cautiously optimistic, though risks from debt, inflation and political instability persist.
FINANCIAL HIGHLIGHTS
In H1 2024, UBA Group delivered strong double-digit growth across high-quality and sustainable revenue streams. This performance reflects our disciplined execution of strategic goals, focusing on balance sheet expansion, transaction banking, and digital banking businesses across our markets.
• Profit before Tax: We achieved a robust Profit Before Tax of N401.6 billion, reflecting our ability to manage risks effectively amidst macroeconomic volatility.
• Customer Deposits: Our deposits grew by 34%, from N17.4 trillion at year-end 2023 to N23.2 trillion in H1 2024, demonstrating the trust and loyalty of our customers.
• Total Assets: We saw a 37% growth in total assets, reaching N28.3 trillion, up from N20.7 trillion at FYE 2023. This growth was driven by strong customer relationships and our ability to capitalize on opportunities across geographies.
• Net Interest Income: Our intermediation business posted impressive growth, with net interest income expanding by 143% year-on-year to N675 billion, further underlining the strength of our core banking operations.
• Digital Banking & Payments: Digital Banking income surged by 107.8% YoY to N106 billion, while funds transfer and remittance fees rose 188.7% and 228%, respectively. We continue to lead in digital banking and payment solutions, helping drive financial inclusion across Africa.
• Trade Facilitation: Income from trade transactions grew 83% to N18 billion as we strengthened our role in facilitating intra-regional and international trade.
Our strategy of investing in technology, innovation, and data analytics continues to yield significant returns, positioning us as a leader in digital transformation.
AWARDS
Our achievements have been recognized through multiple awards, including:
• Global Finance’s Best Bank in Frontier Markets,
• Best SME Bank in Africa,
• Best SME Bank in Mozambique,
• The African Banker’s Regional Bank of the Year for West Africa.
These accolades reflect our commitment to excellence and delivering sustainable growth across our markets.
BUILDING AN EVEN BETTER BANK
We continue to invest in building a better bank through improvements in People, Processes, and Technology:
• People: We recognize that our people are our greatest asset. In 2024, we promoted over 2,000 employees and paid the 2023 bonus to eligible staff across Nigeria and UBA Africa (ex-Nigeria).
• Process Improvements: Our smart automation initiatives are simplifying service delivery. For instance, our website now offers self-service options for BVN and NIN linkage, account updates, card blocking, and more. Additionally, a comprehensive review of our procurement processes has led to significant cost optimization.
• Technology Investments: Our ongoing investments in technology are enabling us to deliver superior customer experiences, drive operational efficiency, and unlock new growth opportunities.
PARTNERSHIPS
Strategic partnerships remain central to our growth strategy. In 2024, UBA was one of six banks to sign a Memorandum of Understanding with the Pan-African Payment Settlement System (PAPSS), enhancing cross-border trade and financial integration across Africa. We successfully deployed instant payment systems in five African countries, with more to follow.
Our collaborations with Telco partners have also expanded, with funds under management now exceeding $1 billion. These partnerships enable us to deliver impactful solutions such as micro-lending and savings products, enhancing financial inclusion.
Environmental, Social, and Governance (ESG)
We remain committed to our Environmental, Social, and Governance (ESG) responsibilities. As highlighted during the recent United Nations General Assembly, achieving the 2030 Sustainable Development Goals (SDGs) is at risk.
At UBA, we are determined to “do good” by supporting inclusivity and environmental sustainability.
• We have pledged to plant One Million Trees over the next one year as part of our environmental stewardship.
• We continue to roll out our Braille account opening packages to more countries, promoting inclusivity for visually impaired customers.
• Our loans to young entrepreneurs, women-led businesses, and SMEs across Africa are part of our broader commitment to driving inclusive growth.
Capitalization
We are at advanced stage with our recapitalization process. Our application has been submitted to SEC and we expect their approval in the next couple of weeks following which the market will be advised.
LOOKING AHEAD
We enter the second half of 2024 from a position of strength. Our proven resilience, strong capital position, and market-leading capabilities position us to continue our growth trajectory. “EXECUTION” will remain our driving force as we focus on market leadership and delivering excellent customer experiences at every touchpoint.
FY 2024 Guidance
FY 2024
Initial
Guidance H1 2024
Achieved FY 2024
Revised
Guidance
Deposit Growth 20% 33.7% 45%
Loan Growth 20% 26.1% 40%
Cost of Risk 3.8% 1.8% 2.8%
Non-Performing Loan Ratio 4.5% 6.2% 6.5%
Return on Average Equity 30% 25.2% 28%
Return on Average Assets 3% 2.6% 2.8%
Capital Adequacy Ratio 30% 28.3% 28%
Cost-to-Income ratio (ex-impairment) 45.1% 50.2% 50%
Net Interest Margin 7.5% 8.3% 8.5%
Closing Remarks
In conclusion, our successes in H1 2024 were made possible by the dedication of our colleagues, the trust of our customers, the support of our regulators, and the confidence of our shareholders. We remain committed to achieving even greater milestones with your continued support.
Thank you, and God bless you all.
Oliver Alawuba
Group Managing Director/CEO
