United Bank for Africa (UBA) Ghana Ltd posted a strong financial performance last year despite the economic headwinds that impacted the entire financial sector negatively.
Overall, the bank closed the year on a note of a significant growth, with its balance sheet up 16%, from GHC5.4 billion in 2021 to GHC6.2 billion in 2022.
The bank also managed to increase its shareholders’ funds from GHC1.13 billion in 2021 to GHC1.19 billion in 2022, a growth rate of 5.2%.
Customer deposits went up by 16% in 2022, reaching GHC4.7billion, up from GHC4.1 billion in the previous year.
Profitability
Although the bank’s profit after tax dropped significantly to GHC59.6 million in 2022 from GHC141 million the previous year, largely as a result of significant impairment losses resulting from the government’s Domestic Debt Exchange Programme (DDEP), its net operating income increased by 51.8%, from GHC449.5 million to GHC682 million in the year under review.
The increase in net operating income, the bank explained, was mainly due to a conscious effort to increase risk assets which saw an increase in gross loans and advances by GHC581.1 million from GHC1,135.1 million to GHC1,716.2 million, a 51.2% increase.
Again, for the second year running, the bank saw strong performance for net trading and revaluation income.
For instance, net trading and revaluation income increased by 70.7%, a remarkable improvement on the 22.8% increment in 2021.
The bank described the feat as testament to its prudent treasury operations despite volatile markets and cedi.
AGM speech
The chairman of the bank, Kweku Awotwi, addressed UBA shareholders and other stakeholders at the bank’s 2022 annual general meeting in Accra yesterday.
He said: “Our strong operational performance notwithstanding, profit before tax declined by 58.3% from GHC281.8 million in 2021 to GHC91.2 million in 2022, largely as a result of significant impairment losses resulting from the Government of Ghana’s Domestic Debt Exchange Programme.
“Our impairment losses for the period increased by a total of GHC311.4 million, out of which GHC282.1 million, representing 90.6%, is an impairment on Government of Ghana securities.”
DDEP impact
The Domestic Debt Exchange Programme (or DDEP for short), undertaken by the government to restore its debts to sustainable levels, has severely affected the entire financial sector, which is estimated to have lost roughly GHC6 billion in the year under review.
The development has forced some analysts and the Ghana Association of Bankers to advise its members to be critically mindful of their exposure to government securities.
Ironically, until now, this was seen as one of the safest forms of investment.
Financial details
Giving further details on the bank’s financial performance, Awotwi said for the second year running, the bank saw strong performance for net trading and revaluation income.
Net trading and revaluation income increased by 70.7%, a remarkable improvement on the 22.8% increment in 2021.
“This is a testament to the prudent treasury operations despite volatile markets and cedi,” the chairman said.
Non-performing poans (NPLs) reduced significantly from 29.4% in 2021 to 15.8%.
Although the bank’s liquidity ratio, which measures its ability to meet its short-term financial obligations, shrank from 86.9% in 2021 to 75.4% in the year under review, it signals that the bank’s balance sheet is still strong and healthy despite the challenging operating environment.
Resilience
The board chairman said that by way of evidence of the resilience of its business model and healthy balance sheet, the bank remains liquid and well capitalised in the face of the phenomenal challenges the financial services sector experienced in the year under review.
UBA ended 2022 with a capital adequacy ratio of 20.20 and a liquidity ratio of 75.4%, a development that, Awotwi said, puts the bank in a strong position to take advantage of opportunities which may arise in the future.
He said the achievements were made possible by the bank’s commitment to providing exceptional services to its customers, robust risk management systems and its focus on digital banking solutions.
“We continue to invest in cutting-edge technology to improve our customer experience while remaining innovative and adaptable to market trends,” he said.
The future
The chief executive officer of UBA, Chris Ofikulu, said: “Our main focus for 2023 and beyond is to concentrate on areas we can improve, which will allow us to respond more effectively to our operating environment.
“This will allow us to focus on delivering improved performance and achieve better returns for shareholders over both the short and long term, as well as broaden our contribution to society as a whole,” he said.
Ofikulu said to achieve the above, Ghana will need to invest efforts and commitments to certain factors, including the constant need to leverage technology and innovation to ensure excellent and timely customer service delivery.
He said UBA will also drive all aspects of efficiency by streamlining all processes to provide faster, more convenient and seamless services to the bank’s customers, ensure value for money and eliminate waste.
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