United Bank for Africa (UBA) sent shockwaves through the Nigerian stock market on Monday with the announcement of a remarkable N2 per share interim dividend for its shareholders. This unprecedented payout, surpassing all other Nigerian banks in the first half of 2024, instantly ignited investor enthusiasm, propelling UBA’s share price to a significant high. The significant dividend payout by UBA also comes against the backdrop of the ongoing bank recapitalization in Nigeria, which excludes retained earnings from the calculation of share capital.
The stock surged by 9.99%, closing at N28.30 per share, leading the gainers’ list on the Nigerian Exchange (NGX). This impressive performance is a direct reflection of increased investor interest, driven by the bank’s exceptional financial results for the first half of the year, which underpins the substantial dividend payout.
UBA’s Strong Half-Year Results
United Bank for Africa (UBA) delivered solid financial performance in the first half of 2024, reporting pre-tax profits of N401.5 billion, only slightly below the previous year’s figure of N403.6 billion.The bank’s profitability was underpinned by a robust net interest income after impairments of N614.4 billion, a substantial increase of 395% compared to the same period in 2023.
This growth indicates that UBA’s strong financial performance is driven by core business fundamentals rather than short-term gains from foreign exchange fluctuations.
Investors are particularly excited about UBA’s commitment to rewarding shareholders with a N2 dividend, representing a total payout of N68.4 billion. This translates to a dividend payout ratio of 21.6%, one of the highest in the banking industry.
In comparison, other major banks like Guaranty Trust, Access, and Zenith Bank reported significantly lower dividend payout ratios for the same period. UBA’s decision to declare such a substantial interim dividend, despite the challenging economic environment, highlights its strong financial position and impressive earnings.
While UBA paid a record dividend of N95.7 billion in 2023, primarily driven by foreign exchange gains, the bank’s recent half-year profits were primarily fueled by interest income and commission fees. This indicates a more sustainable and fundamental source of income. This generous dividend payout is expected to further enhance investor confidence and drive UBA’s stock performance in the near future.
Over the past year, UBA’s share price has surged by an astounding 68.4%, reflecting sustained positive sentiment around the bank’s financial performance and strategic initiatives. The substantial price appreciation highlights UBA’s ability to deliver consistent value to its shareholders, making it one of the best-performing banking stocks on the NGX in recent times.
Shareholders who are on the bank’s register as of October 14, 2024, will qualify to receive the dividend, which will be disbursed on October 22, 2024.
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