United Bank for Africa (UBA) Plc delivered a sharply weaker financial performance in 2025, as foreign exchange losses, rising loan impairments, and mounting legal risks combined to erode profit and force a steep cut in shareholder returns.
Pinnacle Daily analysis of the bank’s audited results shows that profit before tax for the group fell by 47 per cent to ₦423.4 billion, down from ₦803.7 billion in 2024.
Profit after tax also dropped significantly to ₦404.7 billion, and at the parent bank level, the situation was worse, with profit before tax plunging by nearly 90 per cent to ₦50.1 billion, from ₦486.53 billion.
The sharp decline was driven largely by a reversal in trading and foreign exchange income as the bank moved from a gain of ₦78.2 billion in 2024 to a loss of ₦231 billion in 2025, weighed down by a ₦277.6 billion fair value loss on derivatives.
This was compounded by a 69 per cent surge in credit impairment charges, which rose to ₦300.8 billion as the bank set aside more funds to cover risky loans.
Core earnings also came under pressure as net interest income fell as funding costs rose faster than interest earned on loans, while operating expenses increased, with staff costs jumping by about 34 per cent.
The weaker earnings forced a drastic cut in dividends as shareholders received only ₦0.25 per share for the year, compared with ₦5.00 in 2024, after the board opted not to declare a final dividend.
UBA’s decision reflects the bank’s need to conserve capital as it races to meet new regulatory requirements set by the Central Bank of Nigeria (CBN), which has raised the minimum capital for international banks to ₦500 billion.
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To comply, UBA issued nearly 10 billion new shares through rights issues in 2025, increasing total shares to 44.2 billion and diluting earnings per share.
Beyond profitability pressures, the bank is also facing significant legal exposure, with 1,737 court cases and total claims estimated at ₦2.5 trillion.
However, UBA revealed that it has set aside only ₦32.7 billion in provisions, relying on legal advice that most claims will not result in material losses.
Its independent auditors flagged key areas of concern in the results, particularly the valuation of complex financial instruments and the estimation of expected credit losses on loans.
UBA’s loan book stood at ₦7.58 trillion, with impairment provisions of ₦554 billion, highlighting the scale of risk in its lending operations.
The group also had to contend with economic instability in some markets, with its operations in Sierra Leone remaining under hyperinflation accounting, while Ghana exited that status during the year, though not before contributing to a net monetary loss.
Loan write-offs, while still significant, declined during the year, as the bank wrote off about ₦79.9 billion in unrecoverable loans, down from ₦208 billion in 2024.
Most of these loans were linked to corporate borrowers, with smaller portions tied to individuals, but the bank stated that none of the write-offs involved insider loans, all of which remain performing.
Regulatory issues also added to the bank’s challenges, with ₦172 million paid in fines, including penalties related to cash disbursement practices and delayed remittances.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X