DGAP-News: ADC's banking investment, Union Bank of Nigeria

DGAP-News: ADC African Development Corporation AG / Key word(s): Interim Report ADC's banking investment, Union Bank of Nigeria (UBN), reports Q3 2013 results ++ 18% loan book growth in the high quality corporate sector ++ On-going transformation picks up momentum ++ UBN exiting non-core subsidiaries with focus on core banking 01.11.2013 / 16:06 --------------------------------------------------------------------- Union Bank of Nigeria (UBN) released its results for the nine months ending 30 September 2013, delivering gross earnings of NGN 79.2 billion (EUR 377.3 million) at group level, down 3.1% year-on-year, and NGN 70.2 billion (EUR 334.5 million) at bank level, up 0.4%. Profit after tax came in at NGN 7.6 billion (EUR 36.1 million) at group level, down 36% year-on-year. At bank level, profit after tax was NGN 12.4 billion (EUR 58.9 million), unchanged from the first nine months of 2012. At bank level, net interest income was NGN 40.2 billion (EUR 191.7 million), down 13.9% year-on-year, partly due to an increase in the cost of deposits and lower overall yields on treasury securities and loans since the end of 2012. In August of this year, the Central Bank of Nigeria increased the cash reserve ratio from 12% to 50% for public sector accounts, which resulted in a loss of interest earning deposits and caused a squeeze on net interest income. Non-interest income, however, was up 21.1% over the same period, totaling NGN 13.7 billion (EUR 65.2 million), boosted by dividends from subsidiaries that offset the negative impact of reduced commission on turnover fees. Net loans of NGN 180.6 billion (EUR 836.0 million) were up 32% year-on-year and 17% quarter-on-quarter. In Q3 2013, UBN's loan book grew at the fastest rate since ADC's investment. Deposits at the bank were down by 2.4% year-on-year to NGN 470.6 billion (EUR 2.2 billion), but up 3% from Q2 2013, as the bank retained non-volatile deposits. Investment securities year-on-year also increased 12.9% to NGN 316.5 billion (EUR 1.5 billion). Changes in bank regulations, including the increase to the public sector's cash reserve ratio and AMCON's increased annual levy, left the sector scrambling for liquidity. By contrast, UBN ended the quarter with healthy liquidity, signified by a gross loans to deposits ratio of 42.1% at the end of Q3 (versus 36.8% at the end of Q2 2013), still well below the CBN limit of 80%. UBN reported a capital adequacy ratio of 21.3% as at 30 September 2013. Bank net interest margin of 7.4% in Q3 2013 was 290bps below Q2 2013 (10.3%) on the back of declining asset yields. Gross asset yields in Q3 2013 fell to 10.6% (from 13.9% at Q2 2013): Loan yields (14.3% versus 15.2% at Q2 2013) and yields on investment securities (10.2% versus 13.9% at Q2 2013). UBN's funding costs rose to 3.9% in Q3 2013 from 3.3% in Q3 2012. Bank operational costs fell 20.2% year-on-year with the cost-to-income ratio falling from 73.8% in the first nine months of 2012 to 63.3% for the same period in 2013. Karima Ola, Member of the Management Board of ADC commented: 'UBN continues to improve its core banking performance while developing its long-term strategy and divesting its interests in non-banking portfolio companies. UBN's transformation is progressing well and key management hires are having a tangible impact on operational performance and results. UBN's liquidity should position the bank well in a Nigerian regulatory environment that favours excess liquidity.' The UBN results publication is available for download via the following link on the ADC website: www.african-development.com/en/operations/banking-operations/union-bank-of -nigeria-ubn/ About ADC ADC African Development Corporation AG (ADC) (ISIN: DE000A1E8NW9; Bloomberg: AZC.GR, www.african-development.com), is a German listed, emerging pan-African banking group. ADC has a strong footprint in Southern Africa via BancABC, a regional commercial banking platform operating in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe as well as exposure to West Africa via Union Bank of Nigeria. Parallel to its banking operations, ADC has a private equity portfolio active in growth markets across sub-Saharan Africa. ADC follows an active management approach with a team of experts that comprise operational banking management, investment banking and merchant banking expertise. ADC optimizes its risk-return profile through a political risk insurance solution offered by the MIGA (World Bank Group). Contact: Investor Relations investor-relations@african-development.com T +49 69 719 12 80 119 End of Corporate News --------------------------------------------------------------------- 01.11.2013 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: ADC African Development Corporation AG Grüneburgweg 18 60322 Frankfurt/Main Germany Phone: +49 69 719 12 80 119 Fax: +49 69 719 12 80 999 E-mail: info@african-development.com Internet: www.african-development.com ISIN: DE000A1E8NW9 WKN: A1E8NW Listed: Freiverkehr in Berlin, Düsseldorf; Frankfurt in Open Market (Entry Standard) End of News DGAP News-Service --------------------------------------------------------------------- 237462 01.11.2013