UBA Slows Expansion To Focus On Africa Consolidation

United Bank for Africa (UBA) has decided to slow down on its aggressive expansion across Africa with the aim of consolidating operations in 19 different countries, a move that would empower the group to fund big power projects in its home country, Nigeria.  “We were expanding very rapidly and we initially thought we would expand further in Africa, but we’ve decided to stop and focus on consolidation,” Phillips Oduoza, Group Managing Director/Chief Executive Officer, UBA said at the Reuters Africa Investment Summit.

The consolidation process will be achieved by a continuous drop in the cost income ratio which fell from 64 percent in 2012 to 60.9 percent in 2013.  It would also require the bank’s 700 branches across sub-Saharan Africa to function more effectively, accounting for the cancellation of the proposed $500 million Eurobond, thus growing the size of non-Nigerian African businesses and improving margins.

“Africa outside Nigeria is currently a fifth of UBA’s business, but within the next three years it would be half,” Oduoza said.  He added that the bank’s investment in areas like infrastructure and power will require long term funding that will be achieved through growing deposits rather than equity or debt financing.

The bank, which has so far expended $500 million in power stations investment, recorded stronger profits in 2013, majorly driven by increase in deposits by 25 percent from N1.8 trillion ($10.9 billion) to N2.2 trillion ($13.5 billion) and a risk asset expansion of 40.5 percent.  Even with its consolidation strategy, the bank is plotting expansion moves to China and Angola.

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