UBA Plc with N135bn Boosts Digital Infrastructure

UBA Plc with N135bn Boosts Digital Infrastructure

With the plan to keep top industry performance rating, Africa’s Global Bank — United Bank for Africa (UBA) Plc, sank a whopping N135.4 billion in its digital infrastructure during the nine months ended September 30, 2024. This constitutes a 121.4 percent increase compared to N61.1 billion expended in the corresponding period of 2023.

Although the 4th quarter figures are yet to be published, the 3rd quarter performance points to a growth trajectory that will manifest when the FY results are out.

According to its unaudited results for the third quarter ended September 30, 2024, UBA recorded a 90.7 percent surge in e-banking income which climbed to N144.4 billion from N75.7 billion in the equivalent period of the previous year.

The record is consistent with the performance of the bank as it benefits largely from its technology-led initiatives targeted at improving customer experience over the past few years

UBA had remained atop its peers in e-banking revenue as it injects huge resources, both human capital and facilities, to maintain the reputation of excellent service delivery.

The e-banking income includes revenue from electronic platforms, such as mobile applications, USSD channels, Internet banking, ATM, PoS as well as other debit and credit card transactions.

Earlier analysis of the FY 2023 financial statements of the Tier-1 group in their Holco structures, revealed that the Big Five (UBA, Zenith, ACCESS CORP, GTCO and FBNH) generated a total of N385.85 billion in e-banking revenue as against N277.14 billion in 2022, representing a 40 percent increase.

UBA earned the highest e-banking income among the Tier-1 financial services institutions during that year. The bank generated N125.57 billion in 2023 representing 32.5 percent of the Tier-1 group total e-banking income for the year.

By this, Africa’s Global Bank grew its e-banking income by 59 percent when compared with N75.94 billion it earned in 2022 to emerge the first in 2023, followed by Access Bank which recorded N101.61 billion against N59.65 billion in theTier-1 group.

The deft application of technology contributed to the UBA’s impressive performance in the third quarter ended September 30, 2024, where it recorded strong and impressive growth across all its key indicators.

In line with its growth trajectory in previous periods, UBA’s gross earnings grew significantly by 83.2 percent to N2.398 trillion up from N1.308 trillion recorded in September last year, while its net Interest income which stood at N443.0 billion at the end of the third quarter in 2023, rose impressively by 149 percent to N1.103 trillion in the period under consideration.

The bank’s financial report for the nine-month period also indicated a 20.2 percent increase in Profit before tax (PBT) to close at N603.48 billion compared to N502.09 billion recorded at the end of the third quarter of 2023. Similarly, profit after tax also rose remarkably by 16.9 percent from N449.26 billion recorded a year earlier to N525.31 billion in the period under review.

As in the preceding two quarters this year, UBA continues to maintain a very strong balance sheet, with Total assets rising to N31.801 trillion, representing a 54.0 per cent increase over the N20.653 trillion recorded at the end of December 2023.

Total deposits rose to N26.50 trillion, representing a 52.7 per cent rise, up from N17.355 trillion at the end of the last financial year. This indicates the growing confidence of the public in the 75-year-old financial services institution. It also points to the success story of its customer-focused digital initiatives.

Commenting on the result, UBA’s Group Managing Director/CEO, Mr. Oliver Alawuba, expressed pleasure that the Group continues to record strong and sustainable growth in its various revenue streams, building on its strong performance earlier in the year.

According to the GMD, the Bank’s performance has been underpinned by consistent strong growth on all core and sustainable banking income lines. He added, “Our substantial investments in technology are yielding tangible business value. This commitment is instrumental in delivering enhanced customer experiences and optimizing operational efficiency.”

Further analysis of UBA’s Q3 2024 report showed that the e-banking revenue of N144.4 billion constitutes a 36.7 percent of the total Fees & Commission income of N392.8 billion during the nine-months period, which contributed in exceeding the N182.3 billion recorded in the equivalent period of 2023 by 14.4 percent.

Also, IT-related expenses rose to N32.3 billion during the review period from N6.4 billion in the equivalent period of 2023, representing an increase of 404.6 percent. The 96.5 percent increase in operating expenses to N552.96 billion from N237.1 billion in 2023 9-months period was largely underscored by the increased investment in digital infrastructure.

Investment in human capital development (including drivers of the ICT infrastructure) rose by 134.6 percent to N5.2 billion against N2.2 billion recorded in the corresponding period of the previous year – confirming UBA’s commitment to digital infrastructure advancement.

Nigerian banks had earlier embarked on aggressive upgrade of their e-banking channels for maximum performance and enhanced revenue generation, which has created a stiff competition among them.

For instance, the banks had engaged in systems upgrade in recent times which created service disruptions to the consternation of the customers and other banks’ services users. In the past weeks, major Nigerian deposit money banks have experienced system downtime that stretched beyond what the public had expected, or is used to.

However, despite the prolonged and severe service disruptions, the exercise did not resulted in the loss of customers’ deposits or other assets maintained by the bank – traced directly to it.

The push for migration to new core systems is driven by multiple factors, including security, cost management, and operational flexibility. Industry experts explained that security concerns are a major reason for the upgrade. With cyber-attacks on the rise, banks are seeking more secure systems to protect customer data and financial information.

Sterling Bank customers were among the first to experience severe disruptions in September when the bank began migrating its core system from T24 to SEABaaS, a new locally developed banking application. This migration caused multiple transaction failures, frustrating customers who were unable to use the bank’s services for days.

In a similar move, GTBank transitioned from its Basis/Banks software, provided by ICS Financial Services, to Finacle, an Indian banking technology solution. This switch was not without challenges, as customers also reported service interruptions during the transition period.