UBA’s PBT reached a record high of N818.8 billion (+259.2% YoY) in FY’23. The performance was driven by the impact of FX movements on the bank’s derivative assets, which resulted in a 62.9x surge in fair value gains on derivatives to N457.2 billion. Interestingly, when we exclude this material one-off income from PBT, we note that FY’23 PBT was still higher by 58.7% at N361.6 billion. Therefore, on this normalized earnings base, we project a 82.2% earnings growth to N658.9 billion in FY’24. Our expectation hinges on the following:
- Sustained improvement in net interest income, supported by margin expansion and growing interest-earning assets base.
- Moderation in loan loss provisioning and lower cost-of-risk of 0.3% (vs FY’23: 3.5%).
- Improving digital transaction and trade transaction income.
