UBN’s topline slightly decreased by 3.75% YoY to NGN166.55bn in 2020FY on the back of downtrend in interest income and fees. Decline in Interest income by 3.34% YoY to NGN113.16bn (vs. NGN117.07bn in 2019FY) was driven by a drop in investment securities as a result of the low interest rate environment and decline in asset yield during the year. Also, despite the rapid growth in the bank’s digital footprint, e-business income and account maintenance fees dragged fees and commission income down by 4.61% YoY to NGN14.27bn. Nevertheless, non-interest income increased by 3.86% YoY to NGN44.48bn supported by FX revaluation gains which grew by 368.71% to NGN3.82bn. Gains (+104.57% YoY) on disposal of fixed income securities also contributed to the growth in non-interest income. We expect the growth in trading gains to be relatively muted this year as yields tick up while FX revaluation gains are expected to moderate as we do not envisage as much devaluation of the Naira as occurred last year. Outlook for interest income is however positive given the current uptrend in interest rates and the bank’s anticipated growth in interest earning assets.
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