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

DGAP-News: ADC African Development Corporation AG / Key word(s): Final Results ADC's banking investment, Union Bank of Nigeria (UBN), reports full year 2013 results 29.04.2014 / 18:38 --------------------------------------------------------------------- <pre> ADC's banking investment, Union Bank of Nigeria (UBN), reports full year 2013 results 53% loan book growth mainly in corporate banking Operational transformation on track with advances in personnel, operations and infrastructure reform On-going sale of non-core subsidiaries to focus on core banking platform, boost capital position and clean-up legacy assets </pre> ADC's banking investment, Union Bank of Nigeria (UBN) released its 2013 financial year results, delivering gross earnings of NGN 121.4 billion (EUR 573.8 million) at group level, up 4% year-on-year, and NGN 103.2 billion (EUR 487.8 million) at core bank level, up 7%. Profit before tax came in at NGN 3.8 billion (EUR 18.0 million) at group level, up 31% year-on-year. At core bank level, profit before tax excluding UBN UK and all non-banking subsidiaries was NGN 4.2 billion (EUR 19.9 million), up 22% from prior year results. Group net interest income at the end of 2013, totaled NGN 57.4 billion (EUR 271.3 million), a decline of 9% compared with year-end 2012, while core bank net interest income of NGN 55.1 billion (EUR 260.5 million) declined by 6%. The reduction in net interest largely reflects declines in Nigerian treasury yields, since 65% of UBN's interest earning assets at year-end are held in either investment securities or interest earning cash. Furthermore, interest from loans and advances was relatively inflated in 2012 due to accrued interest on a large AMCON bond receivable which was repaid in 2013. Group and core bank non-interest income increased to NGN 24.5 billion (EUR 115.8 million) and NGN 24.2 billion (EUR 114.4 million) respectively. Net loans were up 43% to NGN 229.5 billion (EUR 1.0 billion) at group level compared to the 2012 financial year and up 53% to NGN 210.1 billion (EUR 947.1 million) at core bank level. 85% of the total credit growth since the beginning of 2012, at core bank level, occurred in the second half of 2013, which is largely attributable to the growth in corporate accounts. The recently appointed Head of Corporate Banking is building stronger relationships with blue chip corporates and reactivating dormant accounts. Deposits decreased by 8% at group level, but remained stable at core bank level, ending the year at NGN 480.0 billion (EUR 2.2 billion). The cash reserve requirement (CRR) on public sector funds increased to 50% in 2013, and 75% in January 2014; reducing the banks yield on public sector deposits. In the first half of 2013, deposits decreased to NGN 456.9 billion (EUR 2.1 billion) at core bank level, partly because of the loss of public sector deposits. The second half of 2013, however, saw deposits grow 5.0%, an annualized rate of 10.0%, which is the fastest deposit growth rate since ADC invested at the beginning of 2012. Operating expenses were down 20% at core bank level to NGN 56.7 billion (EUR 268.0 million) versus prior year figures, despite including non-recurring expenses of NGN 7.8 billion (EUR 36.8 million) related to staff restructuring, and an overall NGN 10.7 billion (EUR 50.6 million) relating to exceptional transformation items. Cost-to-income ratio ended the year at 85.8%, down from 95.3% at FY 2012. Gross loan-to-deposit ratio was 48.1% at core bank level. UBN's liquidity remains strong, with a liquidity ratio of 76% and room to grow its loan book by a further 52% without raising more capital, or breaching the 80% regulatory threshold for the loan-to-deposit ratio. UBN finished the year with a Capital Adequacy Ratio (CAR) of 25%, well above the regulatory requirement of 15%. UBN was exposed to developments in the Nigerian discount house sector in the second half of the year, which contributed to an increase in the overall impairment charge of NGN 12.1 billion (EUR 57.2 million) at group level. The return on average equity (ROaE) in 2013 was 2.1% for group and 2.8% for the core bank, versus 0.7% and 1.8% respectively from the previous year, reflecting the negative impact of one-off restructuring costs and extraordinary provisioning due to the discount house crisis. Core bank net interest margins ended 2013 at 9.4%, 160bps lower than FY 2012 due to declining Nigerian treasury yields as well as increased exposure to higher quality, but lower margin corporate credits. Gross asset yields were at 13.5%, down from 15.2% at FY 2012, while loan yields came in at 15.9%, down 2.9% vs. FY 2012. Karima Ola, Member of the Management Board of ADC commented: "2013 was the first full year with UBN's new core executive management in place. The management has been successful in making UBN a more stable and customer-focused bank. UBN's transformation was a core part of the 2013 financial year, with multiple projects across all areas of the bank's business. Personnel restructuring was successfully executed, with an on-going recruitment process, while corporate and retail divisions put significant efforts into their marketing, with targeted sales efforts and customized products. The bank has invested significantly into technology and operations as well as risk management and financial control. The overall transformation aims to give the bank a competitive advantage in the Nigerian banking industry, enabling UBN to outperform its peers in an increasingly hawkish regulatory environment." ADC's 2013 Annual Report is now available online: www.african-development.com/en/investor-relations/investor-information/fin ancial-reports/ 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. In addition 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. Contact: Investor Relations investor-relations@african-development.com T +49 69 719 12 80 119 End of Corporate News --------------------------------------------------------------------- 29.04.2014 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 80 115 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 --------------------------------------------------------------------- 265515 29.04.2014