UBA Ghana posts 16% growth in balance sheet
United Bank for Africa (UBA) Ghana Ltd posted a strong financial performance last year despite the economic headwinds that negatively impacted the entire financial sector.
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Overall, the bank closed the year with a significant growth of 16 per cent of its balance sheet from GH¢5.4 billion in 2021 to GH¢6.2 billion in 2022.
The bank also managed to increase its shareholders’ funds from GH¢1.13 billion in 2021 to GH¢1.19 billion in 2022, representing a 5.2 per cent growth rate.
Customer deposits went up by 16 per cent in 2022, thus GH¢4.7billion from GH¢4.1 billion in the previous year.
Profitability
Although the bank’s profit after tax dropped significantly to GH¢59.6 million in 2022 from GH¢141 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 per cent from GH¢449.5 million to GHS¢682.0 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 GH¢581.1 million from GH¢1,135.1 million to GH¢1,716.2 million, representing 51.2 per cent 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 per cent, a remarkable improvement on the 22.8 per cent increment in 2021.
The bank described the feat as a testament to the prudent treasury operations despite volatile markets and cedi.
AGM address
Addressing the bank’s shareholders and other stakeholders at the 2022 annual general meeting (AGM) in Accra yesterday, the Chairman of the bank, Kweku Awotwi said: “Our strong operational performance notwithstanding, profit before tax declined by 58.3 per cent from GH¢281.8million in 2021 to GH¢91.2 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 GH¢311.4 million, out of which GH¢282.1 million, representing 90.6 per cent, is an impairment on Government of Ghana securities.
DDEP impact
The DDEP undertaken by the government to restore its debts to sustainable levels has seriously affected the entire financial sector which is estimated to have lost about GH¢6 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 which was, until now, described as the safest.
Financial details
Giving further details on the bank’s financial performance, Mr 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 per cent, a remarkable improvement on the 22.8 per cent increment in 2021.
“This is a testament to the prudent treasury operations despite volatile markets and cedi,” he said.
Non-Performing Loans (NPLs) reduced significantly to 15.8 per cent from 29.4 per cent in 2021.
Although the bank’s liquidity ratio, which measures its ability to meet its short-term financial obligations, reduced from 86.9 per cent in 2021 to 75.4 per cent in the year under review, it indicates that the bank’s balance sheet is still strong and healthy despite the challenging operating environment.
Resilience
The board chairman said as 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 which have been experienced during the year under review.
The bank ended 2022 with a capital adequacy ratio of 20.20 and a liquidity ratio of 75.40 per cent, a development Mr Awotwi said, puts the bank in a strong position to take advantage of opportunities that 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 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 the bank, 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.
Mr Ofikulu said to achieve the above, we will need to invest efforts and commitments to certain factors including the need to constantly leverage technology and innovation to ensure excellent and timely customer service delivery.
He said the bank will also drive efficiency in all its aspects by streamlining all processes to provide faster, more convenient and seamless services to the bank’s customers, ensure value for money and eliminate waste.
