As most banks devise various means to contain the ever growing electronic banking fraud in the country, Kennedy Uzoka , the Group Managing Director/CEO of United Bank for Africa (UBA) said the use of finger print and retina recognition have beenworking like magic for his bank.
At its last Annual General Meeting (AGM) in Lagos, Uzoka told the shareholders how these worked for the customers, he said: “The probability of two individuals having the same finger print is very remote, thus significantly reducing the risk password compromise that often expose customers to the risk of phishing and broader online banking fraud events”.
Like I noted in my maiden report to shareholders last year, we are very mindful of our responsibility to consistently deliver superior and sustainable returns. Our share price, which is perhaps a proxy measure of how the market rates our performance, has once again beaten the banking sector index and the overall market benchmark, NSE All Share Index. I am pleased to report that our stock rallied 129 per cent in 2017, complementing our consistent interim and final cash dividends to shareholders. We are committed to our ultimate responsibility of creating sustainable wealth for shareholders. It is my staunch belief that global investment community will progressively reward our consistent performance and place a premium on our shares, particularly as both domestic and foreign investors increasingly appreciate the competitive edge and prospect of our business.
Even as we are businessmen with profit orientation, we are steadfast in our dedication to customers’ success, community development and the broader growth of the economies where we operate. We continually make critical investments in people, systems and service channels to meet the anticipated needs of our customers. This proactive approach to customer service and offerings is beginning to differentiate our franchise, earning us a new leadership reputation. We are guided by our exceptional heritage and discipline of conducting business in a sustainable way that promotes communal progress.
Notwithstanding intense competition and the lagged impact of recession in Nigeria, we grew gross earnings by 20 per cent year-on-year to N462 billion, reflecting improved staff productivity. Notably, we leveraged enhanced customer service and predictive analytics to grow our share of existing customers’ wallet, as we continue to make value propositions that fulfil customers’ aspirations. With a reinvigorated sales strategy, we added almost a million new customers. Our investments in people, technology, and process efficiency are deepening our competitive edge and broadening our earnings capacity. We grew the non-funded income by 12.5 per cent to N118 billion, largely driven by annuity-based offerings, thus reinforcing the quality and sustainability of our earnings growth. It is exciting that our offerings are gaining strong momentum across Africa, as our franchisee is being renowned for innovation and service excellence. Our prepaid cards are now being used to activate farming subsidies and other social intervention programmes in a number of countries, an efficient and transparent approach that blocks leakages and ensures effective delivery of subsidies to the target population. In Uganda, we are automating utility and tax collections. Our focus is to ease payments and remittances while also helping the government to stem leakages. From East to West, Central Africa to Southern Africa, we are leveraging our speed to market and innovation to drive efficiency in payment, collections, remittance and cash management. We grew commissions on transactional services and trade related income by 54 per cent and 73 per cent respectively, with both income lines representing almost a third of our fees and commission income in the year. While the total non-interest optimistic that our novel investments in alternative channels will support the growth of these income lines, which we believe should contribute 40 per cent of our gross earnings in the medium term.
At a time when private sector credit and deposits shrunk in Nigeria, I am particularly excited that we grew our net loan portfolio and total deposit book by 9.4 per cent and 10.5 per cent respectively. Leveraging the successful issuance of our debut Eurobond and growing deposit base, we grew the balance sheet by 16 per cent to cross the N4 trillion mark. This positive trajectory reinforces the market gain of our subsidiaries, as we grow the business to become systemically important in all our countries of operation. More so, we are in a vantage position to grow with strong BASEL11 capital adequacy ratio of 20 per cent and 22 per cent at the bank and group levels respectively. Our balance sheet liquidity ratio of 50 per cent and relatively low 60 per cent loan-to-deposit ratio reinforce our capacity to grow.
It was a year of recovery for Africa, as stable commodity price complemented monetary and fiscal measures in stimulating economic activities. Although the non-oil sector remained relatively weak, Nigeria recorded positive GDP growth of 0.8 per cent; Ghana posted 9.3 per cent GDP growth and the East African economies recovered from the impact of 2016 drought. Apart from the price of cocoa and coffee which remained weak, most commodity prices rallied through 2017; the price of copper and crude oil surged 31 per cent and 18 per cent respectively just as the price of gold and cotton rallied 14 per cent and 13 per cent respectively in the year.
Current account and external reserves positions improved as a result of stronger foreign currency earnings from commodity exports, coupled with foreign portfolio inflows. The enhanced foreign currency liquidity ultimately stabilised the local currency of most African markets in which we operate. The Cedi, Shilling and Metical were relatively stable, weakening barely five per cent, O.5 per cent and 0.4 per cent respectively throughout the year. Inflation rate continue to moderate across most of our chosen markets in Africa. Nigeria headline inflation, which peaked in January 2017 at 18.7 per cent, moderate4d to 15. Per cent in December 2017 and has eased further to 14.3 per cent in February 2018. In Ghana, inflation rate dropped from 15.4 per cent in 2016 to 11.8 per cent in December 2017, with a benign outlook of single digit inflation before the end of 2018. In Kenya, where headline inflation rose to 11.7 per cent in May 2017, consumer prices have stabilised, with inflation now hovering 4. Per cent. Countries in the UEMOA and CEMAC regions maintain low single digit inflation, particularly as the currency peg continues to underpin inflation rate. We are hopeful that we have put behind us, the high cost of doing business which characterised most of 2017 financial year.
Overall, the macroeconomic and business environment is gradually improving across a number of our markets and we look forward to sustaining this positive development in the business environment.
It is worth mentioning that the World Bank Doing Business 2018 Report recognised the improving business environment in sub-Saharan Africa(SSA), with three of the top 10 countries that improved globally being SSA countries; Malawi, Nigeria and Zambia. We operate in two of these countries; Nigeria of course is our core market and we have operations in Zambia. Nigeria moved up 24 notches to rank 145th in the 2018 World Bank Doing Business report. We expect this positive development will improve the fundamentals of our SMEs and corporate customers, going forward, especially as the fiscal efforts, towards making Africa more business friendly, are sustained.
In spite of the positive macroeconomic indices recorded, credit growth was relatively slow across most countries for different reasons, as banks were cautious on risk asset creation. While the lending rate cap stifled credit growth in Kenya, the need to resolve public sector exposures moderated most banks’ appetite for loan book expansion in Ghana. In Nigeria, public sector borrowing partly crowded out private sector growth, especially as banks were cautious of the lagged and tailwind impact of the recession and Naira devaluation on business and the broader operating environment. Thankfully, the coast is clear now and outlook for credit growth is quite benign in a number of our markets. Even as Nigerian banks will be relatively conservative on lending on the run-up to the 2019 elections, we expect credit growth to be stronger this year, compared to 2017, given the improved macroeconomic environment and lower public sector borrowing. The imminent removal of rate cap and recent accommodative stance of the Central Bank should stimulate credit in Kenya, just as the burgeoning economy in Ghana give impetus to banks to lend more this year.
In our determination to become an undisputable leader in Nigeria and become a systemically important player in all of our countries of operation in Africa, I cannot overemphasise the role of technology in our strategy. To entrench our leadership, we are pioneering technology disruption and innovation, redefining banking through new digital offerings. We do not want to react to competition and market disruptions, rather, we aim to be the game changer. It is on this note that we are pioneering initiatives in lifestyle banking, offering new products and services that align with our customers’ preferences and daily lifestyle. We recently pioneered “Leo”, the Virtual Banking Robot, in partnership with Facebook, giving us the opportunity to serve our customers through Facebook chat; a simple, easy and fast way of meeting customers’ need. It brings banking to their fingertips. Just say what you want and Leo, our Virtual Banking Robot, will act on it immediately. Within two weeks of launching Leo, we opened and reactivated over 60,000 accounts through this platform. The customer acquisition rate has been phenomenal and customers are increasingly adopting it as a preferred channel to meet their banking needs. To further enhance the security and user experience on our mobile banking platform, we recently added finger print and retina recognition access. This further personalises the mobile banking platform for every single customer and saves customers the stress of memorising different passwords to log into their account. The probability of two individuals having the same finger print is very remote, thus significantly reducing the risk password compromise that often expose customers to the risk of phishing and broader online banking fraud events. The thrust of our digital banking strategy is to consistently offer tailored solutions that anticipate and meet customers’ preferences, delivering services that make life easier and better for Africans as well as African business and institutions.
Having stabilised all our African subsidiaries, we are now in a new growth mode. It’s a profit maximisation mode, targeted at being a systemically important bank in all of our countries of operation. To this end, we have streamlined our leadership along congruent markets to deepen our focus, enhanced cross-selling initiatives and taken decision makers within the Group closer to our customers. Within this leaner structure, there is greater emphasis on synergy extraction across our Group, from sales to operations, treasury and product development. This has enhanced our speed to market, customer service and value creation. There is notable efficiency gains from the renewed attention to the value propositions that define our geographic diversification. More so, it has been a lucrative approach towards extracting scale economics and taking full advantage of the diverse opportunities in our chosen markets. The Group’s geographic spread strengthens our competitive edge in many trade and investment corridors in Africa, particularly as we are the only Sub-Saharan African bank with a deposit taking licence in the United States, thus positioning us as an efficient gateway for both capital and donor flows to Africa. With the authorisation of the Prudential Regulation Authority, we are upbeat on our Group’s capacity to further fulfil our customers’ increasing appetite for cross border transactions, using our recently expanded UK franchise, UBA (UK) Limited.
Notwithstanding the ever increasing competition from traditional peers and emerging Fintechs, we are approaching 2018 with strong optimism. We will increasingly leverage our pan-African platform to deepen and formalise intra-Africa trade, especially as we extract cross border synergies across our Group operation. While we are focused on growing our market share, we will remain committed to our sustainable banking principles and risk management practices. I am more than ever convinced in the prospect of this great institution and the prospect for wealth creation for all stakeholders.