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UBA Issues Profit Warning, May record Loss based on Zenon’s Non Performing Loans

By on February 8, 2012

UBA Plc, one of the top banks in the country, has issued a profit warning in respect of its 2011 Year End results.

Analysts are expecting the company to report a loss of anywhere between N 2 billion and N 12 billion for the 2011 year due to non performing loans it sold to the Asset Management Corporation of Nigeria (AMCON) at a steep discount.

One such loan was N 36 billion owed UBA by Femi Otedola’s Diesel trading company, Zenon. UBA was forced to write the loan off its book and sell it to AMCON for approximately N 21 billion, according to information provided by analysts at Nexus Capital.

“This represents a haircut of 40%”, says Soji Solanke of Renaissance Capital. “UBAs haircut was the highest relative to other banks on Zenon, and the highest haircut it took on any singular loan sold to AMCON.”

The Renaissance Capital Investment Analyst stated in an emailed report that UBA’s books are now very clean with only 3% non-performing loans and going forward in Q1, 2012, the bank would have to meet its forecasted profit in order to appease investors.

UBA disclosed to the Exchange today that it would make N 12 billion in the first three months of 2012.

The following is the full excerpt of a disclosure release the company provided the Nigerian Stock Exchange:

United Bank Africa Plc profit warning for FY11 and profit forecast for 1Q12

United Bank for Africa Plc hereby issues a profit warning for FY2011 in respect of its FY 2011 results following the preliminary review of the Group’s management accounts for the year ended 31st December 2011.

The Bank expects to announce a loss, driven principally by one-off writes against earnings, including those arising from the transfer of loans to the Asset Management Company of Nigeria (AMCON).

Management does not anticipate further similar write offs in 2012 and following these actions, affirms that the Group’s Balance sheet and Capital are in a robust position providing a solid foundation for the Group’s future growth path. Earnings from the underlying operations of the group’s Nigerian business give considerable grounds for optimism for the coming year and the group continues to witness significant growth in its operation across Africa with an increasing contribution to group profitability.

Accordingly, the group is increasingly confident on the outlook for FY 2012 with an indicative forecast profit before tax of NGN15bn for Q1 2012. January results have been impressive and confirm our belief that the forecasts will be achieved barring any unforeseen circumstances.

_end_

Shares of the company were down 5% today to close at N 1.99

One Comment

  1. Hanacho

    February 9, 2012 at 6:35 am

    Look the foreign lobbist are not happy with the way , transformation is coming in Nigeria now.

    One even said in an Interview” The days of Free oil is over “.

    when i watched him say this , even though he never caled countries , i knew he was refering to Nigeria ,when he said ,Countries are setting up regulations .
    This means while Nigerians suffer in Poverty , these wicked lobbist come and front like business men for oil cartels ,fustrating every thing that will make Nigeria great .
    Obama in his speach identified the effect of Lobbist in the American society ,he even said , they will not be in his Whte house .

    Nigetians need to be careful and aks them selves .

    ” why is shell suddenly giving oando contracts for drilling .

    (1)Are there engineers no more or are they broke?
    (2)Why is shell not ready to do decent business in Nigeria?
    (3)Shell wanst to sue oando and spoil every programe ste up in the oil and gas Sector knowing fully the owner of oando.But it will fail?
    (4) Nigerians must know that the multinational companies are smarter and business oriented , they will set up virus to spoil this with excuses like , the NAss members want bribe or they are delaying there jobs with long medigations , so NASS must be smart and able to tacke issue with swipt actions .
    (5)All multinatons dont want to do decent business in Nigeria ,infact they feel ,it will soon end and business as usual will return , there local counterparst are telling them this .
    More will come when i find out more