By Ayomide Otitoju
Shareholders of United Bank for Africa (UBA) have reaped substantial rewards, enjoying capital gains of 375 percent over the past five years, according to official data from the Nigerian stock market. Investors in UBA have realized an impressive average annual return of approximately 75 percent, underscoring the bank’s status as a high-yielding, inflation-resistant investment.
Between December 31, 2019, and December 6, 2024, UBA recorded a cumulative capital gain of 374.83 percent, translating to an average annual gain of 74.97 percent. The bank’s share price opened in 2020 at N7.15 per share and has since climbed to N33.95 as of last weekend, representing a 35.26 percent increase from its 2024 opening price of N25.10.
An analysis further revealed that an investor who purchased shares worth N500 thousand naira at the 2020 opening price would now have a market value exceeding N2.374 million, highlighting the financial benefits of capital gains, not including accrued cash dividends during this timeframe.
Currently, UBA is inviting existing shareholders to enhance their investments through an ongoing rights issue valued at N239.4 billion naira. The banking group is offering 6.84 billion ordinary shares of 50 kobo each at a price of N35 per share, with shares pre-allotted based on one new ordinary share for every five shares held as of November 5, 2024. This rights issue is set to close on December 24, 2024.
Market analysts underscore the importance of share price performance, correlating it to the fundamental values of listed companies. Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management, explained that share pricing operates on a “forward-pricing mechanism,” where investors project potential future returns based on historical performance and developing trends. Similarly, David Adonri, Managing Director of HighCap Securities Limited, noted that share prices reflect a company’s market value, encompassing both past performance and future expectations.
In related financial results, UBA reported an impressive 83.2 percent increase in gross earnings for the nine months ending September 30, 2024, reaching N2.39 trillion—almost double the N1.31 trillion recorded in the same period in 2023. Profit before tax surged to N603.48 billion, compared to N502.09 billion a year earlier, while profit after tax rose from N449.26 billion to N525.31 billion.
Additionally, UBA’s balance sheet expanded significantly, growing by 54 percent to N31.80 trillion as of September 2024, up from N20.653 trillion at the close of December 2023. This growth has been driven by the bank’s technology-led initiatives aimed at enhancing customer experience, with total deposits climbing to N26.50 trillion—a 52.7 percent increase from N17.355 trillion at the end of 2023.
