Nigeria’s UBA Plc trims loans forecast

Nigeria’s UBA Plc trims loans forecast

Tuesday, September 8, 2015 6:37 pm

Phillips Oduoza, UBA CEO

Phillips Oduoza, UBA CEO

(Reuters) Nigeria’s United Bank for Africa (UBA) lowered its forecast for 2015 loan growth to 5 to 8 percent from 15 to 20 percent as rising regulatory and economic uncertainty increase risks to lending, the bank said on Tuesday.

UBA CEO Phillips Oduoza told an investor call that the top tier lender would maintain a conservative approach to lending for the second half of the year with a view to balancing risk with returns.

Loans grew 8.5 percent in the first half with foreign currency loans accounting for 30 percent of total 1.16 trillion naira ($5.8 billion) loan book. That compares with 14 percent growth in loans last year.

Oduoza said the bank would maintain its other forecasts. He forecast 2015 return on equity (ROE) would be above 20 percent, up from 19.2 percent last year. ROE hit 22.3 percent in the first six months of the year.

“We have revised downwards our loan growth target … given renewed uncertainity in the global and domestic market we would maintain a conservative approach,” Oduoza said.

Nigeria’s economy slowed sharply to 2.35 percent in the second quarter from 6.54 percent a year ago as lower crude prices took its toll on Africa’s biggest economy and top oil producer.

The drop in crude prices also hit the currency market, prompting the central bank to tighten access to dollars in a bid to curb speculation on the naira, in turn hurting bank revenues from foreign exchange activities.

Oduoza noted that regulatory risk was also rising with the government withdrawing public funds from the banking sector.

Last week, UBA posted a pretax profit rise of 35 percent in the first half to 39.04 billion naira ($196 million) and declared a dividend of 0.20 naira, thanks to increased income from business customers.

He said UBA restructured less than 1 percent of its loan book during the first half with 17 billion naira worth of loans made to cash-strapped Nigerian state governments exchanged for 20-year sovereign bonds with the debt office.

A 10 billion naira loan to one oil and gas customer was also restructured in the period, Oduoza said.

UBA shares climbed 2.38 percent to 4.30 naira on the Lagos bourse on Tuesday, outperforming the 1.02 percent rise on the broader stock index.

All but one out of UBA’s 17 African subsidiaries were now generating profits, Oduoza said contributing 22 percent to gross earnings in six months. He expected African subsidiaries to account for half of its total business in the next few years.

“We have concluded the first phase of our African expansion and there’s no need to raise capital in the near future,” he said, adding that the lender would expand to South Africa and Angola after consolidating its existing operations


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