Chairman, United Bank for Africa (UBA), Tony Elumele, is confident the bank will realize the N500 billion minimum capital base ahead of the March 31, 2026 deadline set by the Central Bank of Nigeria (CBN).
On March 28, 2024, the apex bank, in a circular to all commercial, merchant, and non-interest banks as well as promoters of proposed banks in the country, gave a 24-months window, commencing from April 1, 2024, for them to raise their capital base from the current N25 billion.
The circular by the Director, Financial Policy and Regulation Department of the CBN, Haruna Mustafa, said commercial banks with international authorization should raise their capital base to a minimum N500 billion, while those with national authorization would have a minimum of N200 billion as their new capital base.
Also, those with regional authorization would have a N50 billion capital base, same as merchant banks, while non-interest banks with national and regional authorizations would be required to have a minimum capital base of N20 billion and N10 billion, respectively.
But, addressing shareholders and investors in UBA during the bank’s Annual General Meeting (AGM) for the fiscal year ended December 31, 2023 held in Abuja on Friday, Elumelu said the bank was poised to leverage its vast capacities as Africa’s global bank to meet the recapitalization target ahead of the deadline.
“UBA remains resolute in its unwavering commitment to innovation, clarity of purpose, operational rigour and most importantly, shared value creation. We are confident that by staying true to these core principles, UBA will continue to deliver exceptional value to our stakeholders and play a pivotal role in shaping a brighter future for Africa. In terms of recapitalization, let me assure you my esteemed stakeholders that we will meet the target ahead of the CBN deadline,” Elumelu said in his statement to shareholders.
Reviewing the country’s economic landscape for the year, Elumelu said despite facing challenging and volatile macroeconomic conditions throughout the year, the Bank delivered exceptional growth, propelled by its strategic focus on geographic diversification, building resilience across business verticals, robust risk management, a prudent and selective lending approach and the continuing execution of productivity and cost-saving initiatives.
The annual report, which he said reflected the achievements during the year, showed the Bank’s realized gross revenue of N2.08 trillion and profit after tax of N607.69 billion, while assets and shareholders funds closed at N20.65 trillion and N2.03 trillion respectively.
With market capitalization currently at N877.23 billion, from N259,92 billion in 2022, shareholders during a special business session during the meeting approved for the issued share capital of the Bank to be increased from N17.099 billion, divided into 34,199,421,366ordinary shares of 50kobo each, to N22.5 billion.
This would be realized by the creation of 10,800,578,634 new ordinary shares of 50kobo each ranking pari-passu with the existing ordinary shares of the Bank, while the Board was authorized to take steps to cancel any unallotted shares of the Bank, to further increase its share capital to accommodate any transaction to raise additional equity capital.
Also, shareholders authorized the Board of Directors to raise additional capital through the issuance of securities, comprising ordinary shares, preference shares(convertible/non-convertible notes, bonds, or any other instruments, in the Nigerian and/or international capital markets, either of standalone issues, or by the establishment of capital raising programmes, either by way of public offerings, private placements, rights issue and/or other transaction modes at prices, coupons or interest rates determined through book building or other acceptable valuation methods approved by the CBN.
In his speech, the Group Managing Director and Chief Executive of the Bank, Oliver Alawuba, said the gross earnings of the Bank, which grew year-on-year by143.3 percent, was fueled by a significant increase in net interest income due to a combination of a strong expansion in the loan portfolio, higher net interest margins, and a substantial contribution from foreign exchange operations.
He said the Bank sustained its cost discipline, with operating costs up by 69 percent and in line with the guideline.
To enhance the performance of the Bank, the MD said the Bank was actively engaged in a comprehensive series of initiatives internally involving people, processes and technology.
During the meeting, shareholders approved the payment of final dividend of N2.30 per share, in addition to N0.50k per share interim dividend paid September 2023, bringing the total dividend to N2.80 per share, or 16.32 percent growth rate.
