United Capital Plc recorded well-rounded performance in 2020 with double-digit growths in turnover and profitability.
Key extracts of the audited report and accounts of United Capital for the year ended December 31, 2020 released at the Nigerian Stock Exchange (NSE) showed that turnover rose by 50 per cent while pre and post tax profits jumped by 61 per cent and 57 per cent respectively.
The board of directors of the investment banking group has earmarked N4.2 billion for distribution to shareholders as cash dividend for the 2020 business year, representing a dividend per share of 70 kobo. The dividend is payable to shareholders whose names appear on the register of members at the close of business on March 5, 2021.
The report showed that gross earnings rose from N8.59 billion in 2019 to N12.87 billion in 2020. Net operating income grew by 58 per cent from N7.90 billion to N12.49 billion in 2020. Profit before tax leapt from N4.95 billion in 2019 to N7.95 billion in 2020. Profit after tax jumped from N4.97 billion to N7.81 billion. Earnings per share rose correspondingly by 57 per cent from 83 kobo in 2019 to N1.30 in 2020.
The balance sheet also showed considerable improvements with total assets rising by 48 per cent from N150.46 billion in 2019 to N224.75 billion in 2020. Total liabilities grew by 52 per cent to N198.32 billion as against N130.88 billion in previous year. Shareholders’ fund rose by a quarter from N19.59 billion in 2019 to N24.43 billion in 2020.
United Capital attributed the top-line growth to significant growths across its income lines, with fee and commission income rising by 77 per cent, investment income by 42 per cent and net trading income rising by 453 per cent.
According to the company, there was also improved operational efficiency during the period as cost-to-income ratio declined by 4.13 percentage points, largely attributable to the faster growth in revenue relative to operating expenses.
United Capital’s profitability margin also improved with pre-tax profit margin gaining 4.13 percentage points to 62 per cent in 2020 as against 58 per cent in 2019. Net profit margin increased by 2.79 percentage points to 61 per cent in 2020 despite a tax charge of 2.0 per cent for 2020 relative to a tax credit of N23.7 million in 2019.
The balance sheet performance was driven by a 54 per cent increase in investment in financial assets, 44 per cent growth in the cash and cash equivalents line, a 60 per cent growth in managed funds, 43 per cent in other borrowed funds and 29 per cent growth in retained earnings.
Group Chief Executive Officer, United Capital Plc, Mr. Peter Ashade said the impressive returns amid the unprecedented environment worsened by the pandemic during the 2020 financial year strengthen the outlook of the company.
He said the results in 2020 empowered the company to adopt a more positive outlook for the year 2021 as it navigates the tough terrain compounded by a second wave of the COVID-19 pandemic among other severe economic challenges.
“Despite the tough operating environment, all stakeholder groups can be assured of our commitment to providing best-in-class solutions to diverse client segments and delivering superior returns to shareholders even as we work with regulatory authorities to strengthen the broader financial system as the domestic economy continues on the path to recovery in the year 2021,” Ashade said.
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