Telling The Uncommon Story Of Tony Elumelu As UBA Posts 18% Growth In Earnings With Profit Hitting N44.5bn
The Oasis Reporters
June 8, 2022
By Greg Abolo
When you meet rising South African politician and leader of Economic Freedom Fighters (EFF), Julius Malema on Twitter, he’s going to wistfully say to you with visible awe that “Nigerian Banks are owned by black Nigerians” !
One of the people he’d be talking about would be Delta State born Tony Elumelu, Chairman of UBA. The cornerstone man with a third class who eventually acquired a failing bank and his team (STB) finally turned around the bank’s position of N 6.49 million to a dizzying N473 Million.
Before telling the inspiring story of Tony Elumelu and UBA’s continuing growth, first, the results of it’s Q1 results in 2022.
Africa’s global bank, United Bank for Africa (UBA) Plc unaudited results for the first quarter ended March 31st, 2022, recording impressive growth across its income lines.
The bank’s result which was released to the Nigerian Stock Exchange showed that gross earnings rose by 18.3% from N155.4 billion in 2021 to N183.9 billion; while operating income which stood at N106.6 billion as at March 2021, grew by N18% to N125.9 billion in the year under consideration.
The results revealed that the bank’s total assets also rose by 4.1% to N8.9 trillion in the period under review, compared to N8.5 trillion recorded at the end of the 2021 financial year; while shareholders’ funds grew by 2.6% to N825.7bn from N804.8 billion in the same period.
Leveraging on the growth in both interest and non-interest income, the bank’s profit before tax (PBT) rose to N44.5 billion as at March 2022, up from N40.6 billion a year earlier, while profit after tax (PAT) stood at N41.5 billion.
Thus, UBA sustained its strong profitability recording an annualized 20.4% Return on Average Equity (RoAE).
UBA’s Group Managing Director/Chief Executive Officer, Mr Kennedy Uzoka, explained that despite the myriad of economic challenges on the global front which shaped the first three months of the year, the bank’s business model continued to show resilience.
These challenges among others, he noted include the ongoing crisis between Russia and Ukraine that has resulted in a huge supply shock, pushing up commodity prices; and the hike in the interest rates in most advanced countries aimed at tackling spiralling inflation, sparking capital flow reversal from emerging and frontier markets.
“Notwithstanding these developments, we were able to leverage gains from our large customer base and vast geographical spread to bolster earnings. We recorded double-digit growth of 18 percent in our gross earnings to N183.9 billion, with our Nigerian operation raking in 65 percent of the revenue while our operations in other countries accounted for the remainder, showing the diversity in our operations,” Uzoka said.
The GMD pointed out that amid the “Great Resignation” wave that has seen a record number of employees across the globe quit their jobs, disrupting the performance of many businesses, UBA, in the last quarter of 2021, thoughtfully reviewed upwards, the salaries of its staff as part of broad measures to retain talents, adding, “We believe our staff is part of our success story with their welfare as a top priority.”
Emphasising the bank’s commitment to sustain value for its shareholders in the 2022 financial year, the GMD said, “With strategies in place to further increase revenue and drive cost lower, we are determined to achieve our Cost-to-Income ratio target of below 60.0% by year-end; and for 2022, we are committed to consolidating on the strong start, surpassing our goals and targets, as we look forward to delivering stronger returns to our esteemed shareholders.
Breaking down the figures, UBA’s Group Chief Finance Officer (GCFO), Ugo Nwaghodoh, said, “Our Q1’22 financial numbers show we are off with a good start. Particularly, I am pleased with how we deployed our balance sheet in the period to grow revenues and increase our market share in a number of West African markets. Driven mainly by interest from customer loans and our investments in long-dated instruments, we grew interest income by an unprecedented quarterly rate of 15 percent to N125.1 billion.
“We drove down our annualized cost of funds by 11 basis points to 2.1%. This was achieved despite the uptick in the interest rate environment in the period,” the GCFO said.
He expressed confidence that the bank will meet and surpass its target for the remaining three quarters of the year, adding that “We remain well-capitalized and liquid to fulfil our growth strategy, take up opportunities in key sectors, whilst navigating impending macroeconomic headwinds.”
United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than twenty-five (25) million customers, across 1,000 business offices and customer touchpoints in 20 African countries. With a presence in New York, London and Paris, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance and ancillary banking services.
Wonderful performance out there.
Now back to the beginning when you have
CHICKEN AMONG EAGLES
In 1990, then All States Trust Bank advertised for vacancies to employ young graduates, the minimum requirement was a Second class upper (2:1) Degree.
In spite of his third class result, he went ahead and submitted his application. In it, he wrote…
“I know I may not have met the qualifying criteria for the advertised roles, but I am INTELLIGENT, DRIVEN, AMBITIOUS and I will make the bank proud. My third class degree does not demonstrate the full extent of my intelligence and ability, and I know I can do so much more,” part of his cover letter read.
These words caught the eye of the Chairman/CEO at the time, who decided to give him a chance despite being “unqualified”. The 27-year-old was hired as an entry-level analyst after passing the due process.
In twelve months, he became the youngest bank branch manager at the time.
The young man, is ANTHONY ONYEMAECHI ELUMELU who later became the MD/CEO of Standard Trust Bank, MD/CEO of UBA (now Chairman),
Chairman Heirs Holdings as well as Founder, Tony Elumelu Foundation.
He is on Forbes list of the top 50 richest people in Africa worth over $700 Million (as at 2015).
Thus, don’t be discouraged by the requirements of men, take that chance with courage and give it your best shot.
In 1997, an isolated bank, Crystal Bank Ltd was acquired by the young banker,
@TonyOElumelu and renamed Standard Trust Bank (STB) Ltd.
So began the journey to the actualization of a vision by the then 34-year old and the youngest CEO of a bank.
Young Elumelu set out on a mission to make a distressed bank;
-A viable financial institution,
-One of the top 10 banks in Nigeria.
-One of the top 3.
He introduced a novel concept & barely 7 months after, the STB team turned around the bank’s position of N6.49million to N473million
Driven by an uncanny foresight, a guerrilla strategy was devised and STB targeted non-commercial locations in state capitals. The brand was gradually domesticated across all the other states when other banks skewed towards commercial locations.
When Nigeria returned to democratic rule, each state and local govt needed to execute their project. STB was already strategically positioned to provide financial assistance. It was able to scale up its branch expansion drive whilst building its retail banking business and customer base.
By the year end of 1999, STB had become the first Nigerian bank to declare annual profits above the billion-naira mark. In 2003, the bank got listed on the NSE. The IPO was oversubscribed by 156%, the largest subscription level in the history of Nigeria at the time.
In 2004, the Central Bank of Nigeria (CBN) announced a new minimum capital base of N25 Billion, heralding a consolidation exercise. STB was already the 5th largest bank & was aiming to hit a N40 Billion mark. This presented an opportunity for growth and STB explored M&A options with the then top 3 banks.
After the 2nd world war, the need for banks to serve as vehicles for commercial growth became very evident and this gave rise to the advent of the British and French Bank (B&FB) in Nigeria.
Nigeria was in the middle of an economic boom and was the cornerstone of the West African economy. So, in the late 1949, B&FB launched its first branch in Lagos, the economic capital of Nigeria. It grew fast & attracted the interest of companies from various sectors of the economy.
In its 1st year of operation, B&FB was already generating considerable extra business. In the following years, its network expanded, opening offices in Kano (1953), Ebute Metta (1955), Port-Harcourt & Apapa (1956), Ibadan (1958), Kaduna (1960) and Enugu (1961).
In 1958, new banking legislation was introduced, leading to the establishment of a Central Bank in 1959 and the introduction of a new banking decree aimed at improving governance over banks.
UBA was then incorporated as a limited liability company on Feb 23, 1961, taking over the assets & liabilities of B&FB. It later became the first Nigerian bank to make an Initial Public Offering (IPO), following its listing on the NSE in 1970.
End of Part 1 of this intriguing saga of growth.
Credits:
UBAGroup Twitter handle
Nairametrics
The Oasis Reporters Inhouse writing
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