Oliver Alawuba, UBA’s Group managing director/chief executive officer, disclosed this to the banks’ local and international investors during its 2023 Full Year Investors’ Conference Call over the weekend following the release of the bank’s financial result for the year ended December 31, 2023.

Although, UBA expressed confidence in its ability to meet the new capital base specified by the Central Bank of Nigeria.

The GMD said that as it stands, UBA remains among the top capitalised banks, and he added that the bank is actively exploring a well-defined strategy to boost its capital base and ensure compliance within the regulatory time frame.

He said,

“This strategy may include a combination of options such as Rights Issue or Private Placement. The fact remains that we are confident in our ability to meet the CBN’s capital adequacy requirements and will keep investors informed as we progress.

“I want to reiterate that, UBA is very well capitalised with shareholders’ fund in excess of N2tn. We will in due course, raise the required component of capital in line with the CBN directive.

The Central Bank Nigeria in late March unveiled new minimum capital requirements for banks, pegging the minimum capital base for commercial banks with international authorisation at N500bn.

Meanwhile, the GMD said that at the end of the 2023 financial year, UBA recorded an impressive leap in gross earnings, as it grew from N853.2bn to close at N2.08tn; representing a strong 143 per cent growth; total assets also rose remarkably by 90.22 per cent, to close at N20.7tn up from N10.9tn in 2022.

UBA’s profit before tax grew by 277 per cent, to close at N757.7bn, up from N200.9bn recorded in 2022; while profit after tax increased by 257 per cent from N170.2bn in 2022, to N607.7bn.

Shedding more light on how the banking group intends to manage the risk of Non-Performing Loans, especially in the face of the harsh business operating climate in Africa, Alawuba, indicated plans to employ proactive credit monitoring, restructuring strategies for at-risk loans, and increased provisioning coverage.

“We expect to keep NPLs at 4.5 per cent for the 2024 full year. This commitment to credit quality is to further strengthen our ability to support our customers, and protect shareholders’ value while contributing to overall economic activity, even in a dynamic economic environment,” he explained.

Ugo Nwaghodo, UBA’s executive director, Finance & Risk Management, in his comments, was confident of an even better performance in the 2024 financial year and pointed out that with its growing investments, both in technology and IT Security, the bank is well on its way to ensure growth in its business.

“The Group remains fervently committed to sustainable growth and maintaining its strong compliance and risk management practices culture even as we drive our business through the next phase of growth,” Nwaghodoh stated.

United Bank for Africa Plc operates in 20 African countries with a presence in New York, London, Paris and Dubai.

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This announcement comes at a time when the Central Bank of Nigeria (CBN) directs banks to increase their minimum capital requirements.

Access Holdings will employ a diversified strategy to raise the capital. The company will issue various financial instruments such as ordinary shares, preference shares, and bonds. Additionally, Access Bank  will conduct a rights issue to existing shareholders, targeting N365 billion.

The capital raised will address Access Holdings’ ongoing working capital needs and fund organic growth initiatives across its banking and non-banking subsidiaries. This capital injection aims to solidify the company’s financial position and support future expansion.

The capital raised by Access Holdings aligns with the CBN’s directive to strengthen the Nigerian banking sector. The increased minimum capital requirements aim to create a more sustainable and resilient banking system.

The capital is also expected to have a positive ripple effect on the Nigerian capital market. As banks seek funds through public offerings and rights issues, activity in the capital market is anticipated to increase.

The Senate Committee on Capital Market and Institutions has expressed support for the CBN’s bank recapitalization plan. The Committee views it as a necessary step to create a safer, sounder, and more stable banking system.

The new capital requirements are seen as justified due to the negative impact of naira depreciation on banks’ capital bases over time. The tiered minimum capital requirements also attend to the varying operational scopes of international, national, and regional banks.

Emphasis on fresh capital injection for meeting the minimum capital requirements is expected to drive banks towards the stock market. This could lead to increased market activity, capitalization, and potentially attract foreign direct investment, benefitting the Nigerian economy.

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