Economy
Stock Analysis: UBA Plc, Upward Revision to 2017F Estimates; BUY
In its recently released H1-17 results, UBA recorded a significant growth in gross earnings (+34.51% y/y), driven by impressive growth across income lines– interest income (+44.25%) and non-interest revenue (+16.01%).
Over H2, we believe the improved yields on interest earning assets (expanded 205 bps to 12.32% in H1-17) – from repricing of loans and elevated yields on investment securities – will remain robust.
Hence, for 2017F, we forecast 50 bps y/y expansion in asset yield to 12.15%, resulting in interest income growth of 22.18% y/y to N322.53 billion.
On NIR, we believe the gains on FX trading (due to fx related gains and derivative transactions) and growth in fixed income securities trading will persist for the rest of the year (albeit marginal over H2), and as a result, we forecast NIR growth of 24.90% y/y to N132.01 billion for 2017F.
Accordingly, we have raised our gross earnings growth forecast higher to 49.44% y/y (previously 30.28%) in 2017F to N470.50 billion.
On funding cost, we have reviewed our 2017F cost of funds estimate 43 bps higher to 4.11%, translating to an interest expense growth of 27.82% y/y to N126.25 billion. Our upward review is driven by the surge in interest charge on borrowings – a development we attribute to the bank’s recently issued USD500 million Eurobond at a yield of 7.875% and a range of bilateral facility secured during the year – and Fed Rates hikes impact on LIBOR linked borrowings.
Note that these drove 38 bps y/y rise in cost of funds to 3.75% in H1-17.
However, we believe the strong yields on interest earning assets will outweigh the expansion in funding cost, thus, we estimate net interest margin to advance 32 bps y/y to 7.02%.
In H1-17, loan loss provision (+104.25% q/q and 8.94% y/y) surged, resulting in 129 bps y/y uptick in cost of risk to 1.93% (NPL came in ahead of 2016 level at 4.20% in H1-17), above management’s 1.5% guidance for 2017F.
The expansion in cost of risk during the period stemmed from an additional N8.57 billion provision for specific credit loss impairment, which we believe relates to exposure to general commerce, manufacturing, oil & gas, and power.
At 4.2% in H1-17, NPL was well-ahead of 2016FY’s 3.90%. For 2017F, we estimate UBA’s NPL to increase to 4.80%, from 3.90% in FY-16, and cost of risk is expected to remain elevated over H2-17, to 2.00% by year end, translating to a credit loss provision of N32.04 billion in 2017F.
Despite the impact of both the change in the treatment of AMCOM levy (which resulted in a one-off charge on other opex) and the increases in personnel expenses and depreciation expense on total opex (37.35% y/y), efficiency measures still improved over H1-17 (supported by the significant growth in operating income), with cost to income ratio contracting 80 bps to 58.60%.
For the rest of the year, we believe cost will moderate across key lines, thus, we forecast 22.22% y/y growth in opex to N186.38 billion, translating to a 593 bps y/y contraction in cost to income ratio to 56.77%, while we expect operational leverage to rise to 5.1x, compared to 4.9x in FY-16.
Overall, we forecast PBT and PAT growth of 74.51% and 14.28% to N109.87 and N82.58 billion respectively, equating to 14.28% expansion in EPS (2017F: N2.28).
UBA’s FX related gains have been largely buoyed by its sizeable FCY position from the issuance of Eurobond and inflows from other FCY borrowings during the year. The balance sheet as at H1-17 reveals that FCY borrowings worth USD405.46 million (Citi Bank Syndicated Facility USD30.46 million, Africa Trade Finance Limited USD75 million and Credit Suisse Tranche A & B USD300 million) are due for maturity between August and December 2017.
As such, we believe PAT growth will be marginal over 2018-2019F, as FX related and revaluation gains taper and NIR contribution to gross earnings contract.
Following the upward adjustment to EPS, we raised our target price by 12.17% to N12.62 (previous: N11.25) and rolled forward our valuation to 2018.
Our current 12-month TP implies upside potential of 31.59% from current levels; consequently, we recommend a BUY on the stock.
UBA is currently trading at 2017F P/BVPS of 0.7x (below the peer average of 0.9x, but in line with the 5-year average of 0.7x) and 2017 FP/E of 4.5x (below the peer average of 5.5x, but above the 5-year average of 3.1x).
Economy
NGX Group’s 65th Annual General Meeting Holds April 29
By Aduragbemi Omiyale
The 65th Annual General Meeting (AGM) of the Nigerian Exchange (NGX) Group Plc has been fixed for Wednesday, April 29, 2026, at 11:00 am at its corporate head office on 2–4 Customs Street, Lagos.
Business Post gathered that the meeting would be streamed live on the company’s website and social media platforms to enable broader participation by shareholders and stakeholders unable to attend physically.
As part of a special business, shareholders will consider a proposed bonus issue of one new ordinary share for every three existing shares held as at the close of business on April 10, 2026, subject to regulatory approvals.
The proposal also includes an increase in the organisation’s share capital from N1,102,309,954 to N1,469,746,605, to accommodate the bonus shares and amendments to the Memorandum of Association to reflect the new capital structure.
Also at the gathering, shareholders will consider and, if deemed fit, approve the company’s audited financial statements for the year ended December 31, 2025, alongside the reports of the directors, auditors, board evaluation consultants, and audit committee.
The meeting will also deliberate on the declaration of a final dividend and the re-election of three non-executive directors retiring by rotation, who are Mr Umaru Kwairanga, Mrs Ojinika Olaghere, and Dr Okechukwu Itanyi.
Other ordinary business items on the agenda include authorising the board to fix the remuneration of the external auditors, determining the remuneration of managers, and electing members of the statutory audit committee.
Economy
BNB Price Reflects Changing Dynamics in the Digital Asset Market
Economy
NASD Unlisted Security Index Crosses 4,000-point Benchmark Again
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange achieved a milestone on Friday, April 24, 2026, after five securities on the platform helped with a 1.85 per cent growth.
Data showed that the NASD Unlisted Security Index (NSI) again crossed the 4,000-point benchmark yesterday.
The index chalked up 73.64 points during the trading day to close at 4,052.59 points compared with the preceding session’s 3,978.95 points, while the market capitalisation added N5.38 billion to finish at N2.424 trillion versus Thursday’s closing value of N2.380 trillion.
The price gainers were led by Okitipupa Plc, which grew by N25.00 to sell at N305.00 per share compared with the previous price of N280.00 per share. Central Securities Clearing System (CSCS) Plc gained N6.92 to close at N76.26 per unit versus N69.34 per unit, Afriland Properties Plc appreciated by N1.00 to N17.00 per share from N18.00 per share, FrieslandCampina Wamco Nigeria Plc improved by 55 Kobo to N99.55 per unit from N99.00 per unit, and Food Concepts Plc increased by 5 Kobo to N2.70 per share from N2.65 per share.
However, there was a price loser, MRS Oil, which dipped by N21.75 to N195.75 per unit from N217.50 per unit.
During the final session of the week, the value of securities jumped 75.2 per cent to N41.3 million from N23.6 million units, and the number of deals expanded by 62.9 per cent to 44 deals from 27 deals, while the volume of securities declined marginally by 0.9 per cent to 447,403 units from 451,522 units.
At the close of trades, Great Nigeria Insurance (GNI) Plc was the most traded stock by volume (year-to-date) with 3.4 billion units worth N8.4 billion, trailed by Resourcery Plc with 1.1 billion units valued at N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units traded for N1.2 billion.
GNI was also the most active stock by value (year-to-date) with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 59.6 million units transacted for N4.0 billion, and Okitipupa Plc with 27.8 million units exchanged for N1.9 billion.
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