Digital payment has a way of simplifying banking transactions and creating value for customers. Banks are investing in banking technology and reaping huge profits from mileage to their operations. United Bank for Africa’s retail banking penetration and deployment of digital payment channels supported its profit growth in the first half of this year. The bank’s N15.38 trillion assets and N404 billion half-year profit demonstrated industry leadership and balance sheet size that support businesses and economy.
In today’s world, technology plays prime role in financial services delivery.
Many financial institutions with foresight are investing heavily in digital payments, making it easy for them to reach the banked, unbanked and underbanked anywhere including places where physical branches are not yet present.
Such innovation and investments are known to deepen quality services delivery, improve customers loyalty and deliver higher profitability.
United Bank for Africa (UBA) is one of the financial institutions that has not only invested in digital payment infrastructure, but introduced innovative and payment methods that make banking seamless for its customers.
The investments impacted positively on its profitability during the first half of this year. UBA recorded N404 billion Profit Before Tax (PBT) in its half-year results for the period ended June 30, 2023. The performance represents a 371 per cent increase from and making it the most profitable bank in Nigeria during the period.
UBA’s Group Managing Director/Chief Executive Officer, Oliver Alawuba said the exceptional performance underscored the Group’s commitment to consistently deliver value to its shareholders.
According to him, the Group made progress in digital payments, retail penetration and also benefitted from the effect of revaluation gains, arising from the harmonization of foreign exchange rates at the different access windows in Nigeria.
He said, “The Group recorded strong double-digit growth in revenues and profits from its operations, the result also reflects the effect of sizeable revaluation gains, arising from the harmonization of currency exchange rates in Nigeria.
“Our reporting currency found a new exchange level at about N756 to 1US$ as of 30 June 2023, compared to N465 at the beginning of the year. The results again demonstrate the benefits of our long-held diversification strategy across Africa and globally. The growth of our international business, most recently in the UAE, only reinforces this earnings quality,” he said.
Continuing he added, “Our business is on a steady growth trajectory, as we further strengthen our risk management traditions and practices necessary technology investments to deliver premium service to our customers.”
“We have also continued to finance landmark projects in critical sectors of the economies across Africa, facilitating intra-Africa trade with our valuable offerings and provide a versatile last-mile distribution network for Africa-bound donor and multilateral agency funds.”
Further analysis of the results released to the Nigerian Exchange Limited also showed 371 per cent rise in PBT, when compared to N85.75 billion recorded in the first half of 2022.
This translated to an annualised Return on Average Equity of 57.7 per cent as against 17.1 per cent a year earlier.
The results also showed the Group recorded double and triple-digit growth across its major income lines, as it continued to show substantial progress in increasing the contribution and market share from its subsidiaries in Africa and globally.
The performance also included a Profit After Tax (PAT) of N378.24 billion, representing a leap of 437.8 percent over first half of 2022 results.
“The Group delivered a 164 per cent growth in its Gross Earnings which rose to N981.78 billion as at June 2023, up from N372.36 billion recorded last year in June 2022,” the bank said.
Total Assets continued a strong upward trajectory, rising above the N15 trillion mark, as it hits N15.38 trillion, representing a 41.7 per cent leap up from N10.86 trillion recorded at the end of last year.
Customer Deposits also rose by a sharp 42.4 per cent to N11.14 trillion in the period under consideration; as against N7.8 trillion recorded at the end of 2022 while shareholders’ Funds increased to N1.712 trillion reflecting the Group’s strong capacity for internal capital generation.
Its operating Income equally grew by 206.6 per cent to N783.96 billion in June 2023; higher than N255.67 billion reported a year earlier.
In line with the Group’s culture of paying both interim and final cash dividends, the Board has approved an interim dividend of 50k per share, which represents over 150 per cent increase over the prior year.
There was strong contributions to Group profit from UBA’s operations in 20 African countries, UBA America, UBA UK, UBA UAE, UBA France. Demonstrating once again the effectiveness of UBA’s global strategy and positioning as the financial intermediary for Africa and the rest of the World – delivering on the Elumelu strategy.
UBA’s Executive Director Finance & Risk, Ugo Nwaghodoh, said the half year 2023 financial numbers reflect an excellent performance across key metrics, as the bank diligently executes its strategic priorities.
“Our half year 2023 financial numbers reflect excellent performance across key metrics, as we diligently execute our priorities for the year. Annualized return on average equity at 57.7 per cent was bolstered by improved operating income and revaluation gains.” he explained.
Nwaghodoh also pointed out that the Group maintains robust capital buffers to support business growth and loss absorbency. The Group’s shareholders’ funds stood at N1.7 trillion, with a capital adequacy ratio of 36.4 per cent”.
Speaking during a media workshop in Lagos, Head of Digital Banking at UBA, Olukayode Olubiyi, disclosed the bank’s continuous investments in digital banking was yielding desired results.
He said, “At UBA, our mobile transactions recorded 414 million count of transactions and N19.3 trillion value of transactions in 2022 as against 118 million count of transactions and N6.4 trillion value of transactions in 2021.
“In the 21st century, the development of digital banking is transforming the landscape of traditional retail banking across the globe. This, however, set the tone for the future of digital banking for all.”
He explained that the use of Internet of Things (IoT) in the banking industry has the potential to provide customers with a more personalised, convenient and secure banking experience.
“It is predicted that digital wallets will account for more than 50 per cent of all e-commerce payments worldwide by 2024, with account and QR-code based transactions leading the way.
“The next winners in the digital banking race will be the banks who manage to continuously generate tailored offers and personalised experiences for their customers. The answer to understanding what customers want and need lies within the amount of data across different banking channels.”
Olubiyi added that by end of 2023, the need for a secure and smooth authentication process would prompt nearly 2.6 billion biometric payment users globally.
The bank’s Executive Director, Nigerian North Bank, Emem Usoro also added her voice on the lender’s commitment to bringing financial services closer to the people.
She said: “Currently, our branch network is very optimal. We would do more to leverage on our existing branch network, using digital technology and partnerships with Fintechs to reach the unbanked and underbanked for the purpose of financial inclusion and access to credit,” she said.
Digital banking and partnerships
The platform is an indigenous QR-code-based payments and collections solution to enhance customers’ experience for merchants and buyers.
The key element of the NQR is embedded in the UBA mobile banking app. Powered by the Nigeria Inter-Bank Settlement System (NIBSS), NQR code provides a consistent user experience and aim to accelerate the adoption of digital technology across the nation.
The NQR payment system is enabling Micro, Small and Medium Enterprises (MSMEs) in Nigeria to receive instant payments
from their customers by simply scanning the codes. It provides a fast, easy, secure, reliable, contactless, and account-based option to receive and pay for goods and services.
Olubiyi, said: “Our customers are at the heart of our business, that’s why we keep going the extra mile to constantly innovate in a bid to satisfy them. As we very well know Micro, Small and Medium Enterprises (MSMEs) contribute significantly to the economy but remain heavily dependent on cash to run their businesses; however, consumers are demanding safer and more convenient ways to pay.”
“That is why we have partnered with NIBSS to introduce the NQR (NIBSS QR), which is a safe, contactless payment platform for merchants and customers to receive and make QR code-based payments for goods and services”.
Olubiyi added, “This payment method is a contactless solution, poised to give customers a unique experience as it is seamless, fast, easy, secure, reliable, and account-based option dedicated to receive and pay for goods and services at their convenience”.
He also explained that the NQR is loaded with enormous benefits, including the fact that payments are instant, can be made without using a debit card, customers are only require to scan the code to pay; and each NQR payment can be integrated into the merchant’s cash register to make book balancing seamless which means manual book keeping is not needed.
In terms of partnerships, the UBA and MFS Africa, digital payments hub, also partnered to offer innovative and timely solutions to their customers.
The areas covered include remittances, electronic money services, SME payments, as well as integration to businesses for cross border payments.
These services are expected to cover the 20 African countries UBA operates in, which include; Nigeria, Ghana, Kenya, Côte d’Ivoire, Zambia, Tanzania, Uganda, Republic of Benin, Burkina Faso, Cameroon, Chad, Congo, the Democratic Republic of Congo, Gabon, Guinea, Liberia, Mozambique, Sierra Leone, Mali and Senegal.
Both organisations signed an MoU at the UBA Head Office in Lagos, heralding the start of a partnership that will be pivotal in leveraging MFS Africa’s digital payment hub that connects over 400 million mobile money users to a wide range of partners including Mobile Money Operators, Money Transfer Organisations, Fintechs, Enterprise Merchants, and others, to drive distribution of financial services at scale.
UBA’s Group Deputy Managing Director, Muyiwa Akinyemi, who spoke during the signing ceremony, expressed excitement at the plethora of offerings that UBA customers will enjoy from the partnership.
“We are very pleased to be partnering with MFS Africa in this venture that will see us offering seamless digital solutions to most of the financial challenges of our customers. UBA is ready and with the value that MFS Africa is known for we are indeed set to dominate the entire banking space in Africa,” Akinyemi said.
He explained that the partnership will help to boost an array of services which will include a centralised payment hub that enables cross-border payments across multiple rails through a single integration; Inbound and Outbound cross border remittances; SME Payments Digitisation; Domestic and Cross Border Corporate Disbursements; Remittance Africa China Corridor; Bin Sponsorship and Web Acquiring.
Speaking on behalf of MFS Africa, Dare Okoudjou, the founder and CEO, said, “As the payments landscape in Africa continues to evolve, we believe that Fintechs and banks need to have a deeper collaboration in expanding opportunities that will help ease remittance, payments, disbursements and collections for businesses and their consumers across all sectors of the economy in Africa.
