In its published quarter 2 profit statement 2021, UBA earnings were over 60 billion Naira. To be precise, it earned 60.5 billion in the period. This was 16.1 billion higher than the previous quarter 2 profit report for 2020. The increase in profit was not from its banking services. The bank contributes little to it. It makes 24.1 billion Naira QoQ compared to 19.5 billion in the previous period.
Revenue of UBA in Quarter 2, 2021
UBA revenue hit a new high of 222.6 billion Naira. In quarter 2 of 2020, its revenue was 205.5 billion. However, the bank revenue fell from 132.9 billion to 135.9 billion Naira. It can’t be said categorically the reason for the decrease in bank revenue. But I noticed that loans and advances to customers rose to 1.83 trillion from 1.81 trillion Naira QoQ. For the group, the total loan disbursed to customers was 2.6 trillion in June 2021 and 2.5 trillion Naira in the period to June 2020.
A reported impairment loss for UBA
The impairment charge for credit losses on financial assets for UBA is 4.1 billion Naira QoQ. This was 7.8 billion Naira in the previous quarter. Therefore representing a 47.4 percent fall in impairment loss. Impairment is charged on loans and advances to banks and customers. Loans and advances to banks were 151.9 and 77.4 billion Naira QoQ. While that if customers were 1.83 and 1.81 trillion Naira QoQ basis.
Why did UBA Earnings Surge?
The United Bank of Africa (UBA) surge for the following reasons:
Interest income. This is the first boost to earnings for the interval. Interest income to the bank was 222 billion Naira. The previous period’s income was 205 billion Naira.
Interest expenses. UBA experiences a major fall in interest expense. The value went from 86.2 billion to 74.5 billion Naira in the current period.
Impairment loss. This dipped below 7.8 billion in the preceding period. It is currently 4.1 billion Naira. A good reason for the fall might be the effective recovery of loans and advances from other banks and customers.
Fees and commission income. Another reason for the increase in UBA earnings for the quarter was fees and commission income. The value for this item in the statement of profit or loss was 74 and 55.8 billion Naira QoQ.
Other operating income. This item was 9.5 billion in Q2 2021 and 3.5 billion in Q2 2020. That is an increase to earnings for UBA by 6 billion Naira.
Employee benefit expenses. This expense fell to 42.6 billion. It was 44.5 billion Naira in the last quarter.
Cash and Cash Equivalent of UBA
UBA maintains a strong cash flow value. Its cash and cash equivalents were 2 trillion 1.8 trillion QoQ. This is enough to pay employee benefits and meet other major expenses in the next period.
The shareholders’ value was 752.5 billion Naira. The book value was 724.1 billion Naira in Q2 of 2020. What contributed to the increase are retained earnings and other reserves.