DGAP-News: ADC's banking investment, Union Bank of Nigeria (UBN), reports full year 2013 results

| Source: EQS Group AG
DGAP-News: ADC African Development Corporation AG / Key word(s): Final
ADC's banking investment, Union Bank of Nigeria (UBN), reports full
year 2013 results

29.04.2014 / 18:38



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


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

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:

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.

Investor Relations
T +49 69 719 12 80 119

End of Corporate News


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Language:    English                                               
Company:     ADC African Development Corporation AG                
             Grüneburgweg 18                                       
             60322 Frankfurt/Main                                  
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                                                
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End of News    DGAP News-Service  
265515 29.04.2014