UBA’s outlook in 2014 positive-says GMD/CEO

Phillips Oduoza, Group Managing Director and Chief Executive Officer (GMD/CEO) of United Bank for Africa Plc (UBA) says the outlook for the bank in 2014 is very positive as he outlined some of the initiatives that have been put in place to meet the bank’s 2014 targets in an interactive discussion with media executives.

“The future of the bank is very bright. UBA has continued to grow very strong in the emerging sectors of the economy. We have the telecommunications, power, infrastructure, oil and gas, in the upstream sector. In fact, there is no big transaction you can talk of today that the UBA is not participating in. Mention any of the big ticket transactions, UBA is there. So the brand remains very strong.” Oduoza said.

He also listed three strategies deployed by the bank to overcome the difficult operating environment in 2013 brought about by regulatory changes.

“Our African operations came into play.  UBA operates in 18 African countries outside Nigeria, so we intensified our activities in these countries. The income losses that we suffered in Nigeria, we try to make from our 18 African countries where our subsidiaries operate. So, the first strategy was to increase revenue from the various African countries. “

“The second strategy was to start ramping up on our electronic banking services. Serving customers through electronic banking, is just a fraction of what it actually cost you to serve the customers through the banking hall. So, increased electronic banking did two things for us, significant reduction in our operating cost and an increase in the income level. “

“Our third strategy was a shift that we made from investment in government securities, in treasury bills, and related instruments, into quality asset creation. Our risk asset portfolio last year increased significantly as you are going to see when we release our 2013 full year results.  These were some of the strategies we adopted to cushion the impact of the crunch that we experienced last year.”

Despite the tough operating environment, Oduoza noted that the bank’s cost-to-income ratio has been improving.

“Cost-to-income ratio has been coming down. Don’t forget that in 2012, we closed with cost-to-income ratio of 78 percent. First quarter of 2013, we came down to 65 percent and in the second quarter, it had come down to 62 percent and it has continued to reduce. Our ultimate objective is to come to the 50s. It’s going to happen, very soon.”

GMD also explained while comparing the profitability of its African operations that “Nigeria is still a very dominant market. The Nigerian market is very huge, when you compare it with other markets, with the exception of South Africa, Nigeria is the second largest.   Our Nigerian operations commands close to 75 percent of total revenue, with other African countries contributing about 25 percent. But going into the future, other African countries will continue to increase the proportion of their contributions and the ultimate objective is to achieve a 50-50 between Nigeria and the various African countries.”

He explained the UBA’s active participation in the power reforms carried out by the Nigerian government noting that “The power reform is going to be a revolution just as we have experienced in the telecommunications industry. The overall impact on the economy is going to be very significant with a multiplier effect on the economy. For us, as a bank, our support to the power sector is long term financing that will provide a steady cash flow and income for the period of that funding. Some of those funding are for seven years, others are for five years or thereabout. So, over that period, the bank will continue to enjoy that revenue.”

He assured the bank’s customers that the bank has a robust online security platform to deter fraudsters. “We have invested significantly in security operations. We have built a state of the art security centre. We partnered with one of the best security companies in the world.  The security centre protects our customers against online fraud.  We call it Security Operations Centre (SOC). It is a battle in which we have to remain ahead of the fraudsters because they come up with various attempts every day.”

He expressed optimism that investors will soon recognize the progress being made by the bank and appropriately price it into the bank’s share price.

“I believe that an upward review of the bank’s rating is going to take place. Our current pricing is based on people’s memory not on our performance and prospects. There is definitely going to an upward movement in our share price because our current performance shows that we are a bank to invest in.”