UBA Explains Real Reason for Lower Dividend Payout

By Dipo Olowookere

That the dividend payout of United Bank for Africa (UBA) Plc for the 2020 fiscal year was cut is no longer news, but the rationale behind the decision will interest shareholders.

A few days ago, the tier-one lender announced its financial performance last year and the key performance indicators recorded improvements, including the gross earnings and profits.

However, the cash reward given to investor was lowered by over 50 per cent as the board recommended a dividend of 35 kobo, lower than the 80 kobo paid for the 2019 fiscal year.

Many investors were not happy about this development and at an analyst call held in Lagos to discuss the results, the Group Managing Director/CEO of UBA, Mr Kennedy Uzoka, explained why the action was taken.

According to him, the fear of any unforeseen circumstances in the future was one of the reasons for the conservative dividend payout this year and the need to deliver better performance.

“Yes, we did not pay a dividend expected from us and this was deliberate because we are building for the future as no one knows what might happen,” he said (referencing the disruption caused to the business environment last year by COVID-19).

The respected banker informed the participants of the call, including Business Post, that, “We have done 73 years as one of the oldest and agile franchises on our continent.

“We have experience in running businesses not just in Nigeria but all over the continent and the world.

“We have seen different challenges and we have experienced many things, and as they say, experience is the best teacher. So we decided to take a conservative stance on dividend payout.”

“What this means is that we have decided to strengthen our capacity to weather any unforeseen development that will come out.

“We have done our stimulation to determine the kind of capacity we want to base on a crystal clear focus of our goals.

“We know exactly what we want to achieve in the current year and in the mid-term and we decided to make sure that we build the right capacity,” Mr Uzoka explained.

However, he expressed optimism that things would get better as the team was working tirelessly to deliver value to shareholders of the company.

“The future looks very promising because we are working very hard to remain a leading operator in Nigeria and on the continent,” he said.

According to him, last year, UBA had a guidance of 25 per cent in deposit growth but “we achieved 48.1 per cent and in 2021, we are looking at a growth of 50 per cent.”