UBA reports N513.4 billion net profit for 9m of 2025

UBA reports N513.4 billion net profit for 9m of 2025, maintaining a steady and resilient performance in the first nine months of 2025, balancing profitability amid margin pressures, cost escalation, and softer trading income. Despite a challenging macroeconomic backdrop marked by tight liquidity and volatile markets, the Group demonstrated strength in its core operations and balance sheet management. For the period ended 30 September 2025, UBA reported a pre-tax profit of N578.60 billion, representing a 4.1% year-on-year decline, while net profit rose 1.6% year-on-year to N513.4 billion, translating to an earnings per share (EPS) of N12.51, up slightly from N12.31 recorded in 9M 2024.

Interest income advanced by 10.1% year-on-year to N1.98 trillion, reflecting improved yields on investment securities and moderate growth in the loan portfolio. However, interest expense grew faster at 16.3% year-on-year to N808.72 billion, as the bank faced higher funding costs in a tightening liquidity environment. This dynamic moderated the expansion in net interest income, which rose only 6.2% year-on-year to N1.17 trillion, leading to a 65-basis point decline in net interest margin (NIM) to 5.3%.

Non-interest income remained broadly stable, supported by the bank’s diversified earnings base. Fee and commission income inched up by 0.4% year-on-year to N234.84 billion, underpinned by growing transaction volumes and digital banking penetration across its African markets. However, trading income dropped sharply by 77.3% year-on-year to N41.4 billion, primarily due to weaker foreign exchange gains and lower trading opportunities in the fixed-income market. On a brighter note, other income surged by 73.7% year-on-year to N33.88 billion, buoyed by foreign currency revaluation gains and loan recoveries that offset the weakness in market-related income.

Operating expenses increased moderately by 4.2% year-on-year to N846.15 billion, reflecting inflationary pressures, elevated technology costs, and higher regulatory levies. Consequently, the cost-to-income ratio edged up to 56.9%, compared to 52.6% in the same period last year, signaling mild cost inefficiencies despite the bank’s continued investment in digital optimization. Importantly, UBA achieved a major improvement in credit quality, with loan impairment charges plunging by 53.9% year-on-year to N56.9 billion. This resulted in a lower cost of risk of 1.0%, compared to 2.4% in 9M 2024, underscoring the bank’s proactive risk management and recoveries across key markets.

On the balance sheet, UBA sustained its growth trajectory with total assets expanding 7.2% year-to-date to N32.49 trillion. The growth was driven largely by an 8.4% increase in investment securities and 3.8% growth in loans, reflecting strategic asset allocation and prudent lending. Customer deposits also grew 8.7% year-to-date to N23.80 trillion, supported by higher retail and corporate inflows, affirming strong customer confidence and a diversified funding base. Despite margin compression, capital adequacy and liquidity ratios remained solid, underlining the Group’s ability to navigate macroeconomic volatility.

Profitability ratios moderated slightly, with return on average equity (ROAE) declining to 18.6% from 24.9% a year earlier, and return on average assets (ROAA) softening to 2.3% from 2.7%. These declines reflected thinner margins and higher operating costs, though the bank’s underlying fundamentals remain sound.

Overall, UBA’s 9M 2025 results highlight its operational resilience and prudent financial management amid headwinds. The bank’s lower impairment charges, stable funding base, and expanding digital infrastructure continue to underpin earnings stability. Looking ahead, UBA appears well-positioned to sustain profitability into Q4 2025, supported by its pan-African presence, robust liquidity buffers, and growing digital ecosystem.

The Group’s fundamentals and market positioning justify an optimistic outlook. The target price remains N55.58, representing an upside potential of 38.8% based on its closing price of N40.05 as of 31 October 2025. Consequently, analysts maintain a BUY recommendation on the stock, reflecting confidence in UBA’s long-term growth prospects and strategic execution across its diverse markets. SOURCE: CORONATION ASSET MANAGEMENT LIMITED