Africa’s Global Bank, United Bank for Africa (UBA), has made headlines with its announcement of a N2 per share interim dividend, amounting to N68.4 billion, for the first half of 2024.
This record-breaking payout, the highest among Nigerian banks so far, has significantly boosted investor confidence.
On the Nigerian Exchange (NGX), UBA’s share price surged by 9.99% and closed at N28.30 per share, placing it atop the gainers’ chart.
This remarkable performance is a direct result of increased investor interest and is linked to the bank’s outstanding dividend payout, which is supported by its half-year financial results.
In its H1 2024 financial results, UBA reported N401.5 billion in pre-tax profits, slightly down from N403.6 billion a year earlier. However, its net interest income skyrocketed by 395%, reaching N614.4 billion, showcasing robust growth driven by interest income rather than foreign exchange gains.
The announcement sets UBA apart from its competitors. With a 21.6% dividend payout ratio, UBA outshines other major banks such as Guaranty Trust (3.3%), Access Bank (5.7%), and Zenith Bank (5.4%).
Analysts suggest that UBA’s large dividend payout indicates that the bank’s profits are well-supported by cash, rather than relying on retained earnings.
This is in contrast to the general belief held by investors, who frequently voice concerns that Nigerian banks’ dividend payout rates are still somewhat low despite their good profitability reports.
As a result of the Central Bank of Nigeria’s recapitalization guidelines which exclude retained earnings from being counted as share capital, banks have become more strategic with their capital allocations.
However, UBA’s move to distribute a substantial portion of its profits signals a strong liquidity position and a willingness to reward shareholders amidst these regulatory changes.
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.
