Whereas most commercial banks shy away from lending to the agriculture sector, Pan-African banking group, United Bank for Africa (UBA) Plc has granted as much as N85billion loans to the sector. Also, lending to the power sector is in excess of N180billion across the UBA Group, recent figures obtained by THISDAY have revealed.
Agriculture is Nigeria’s single largest contributor to economic growth and employs the largest number of rural dwellers, yet its share of banking sector credit has been low because commercial banks regard the sector as unsafe for lending.
Recent figures obtained from UBA group revealed that the bank is the highest lender to agriculture.
Head, Investor Relations, at the UBA Group, Mr. Abiola Rasaq said at a recent interactive session with journalists that the bank’s loans to the agriculture sector represent about 5 per of its overall loan book.
He explained that the Pan-African financial institution find these sectors to be very critical to Nigeria’s economic growth and stability. Besides, he said the loans to the agriculture sector will help Nigeria attain her target to be self-sufficient in food production.
Rasaq also noted that UBA group was one the banks that have extended a lot of loans to the manufacturing sector because it is very critical to the growth of Nigerian economy.
“We are one the banks that lend a lot of money to the manufacturing sector and one of the few banks that lend a lot of money to the power sector because we find these sectors to be critical.
In terms of SMEs, UBA is the highest lender to agriculture. Today our loan book in agriculture alone represents about 5 per of our overall loan book of N1.7trn; that represents about N85billion in agric.
“In power, today, we have lend in excess of N180billion across the UBA Group, and not just in Nigeria but in some other African countries because we have identified these sectors to be very critical, not only from a business perspective to us as a bank, but also because we believe that if we get the agric sector right for example, we will attain food self-sufficiency, which is very important. So we see that as a way of supporting the real sector of the economy not necessary from the banking sector perspective or from a profit making perspective”, said Rasaq.
In terms of Corporate Social Responsibility (CSR), Rasaq said the bank spent N816million in 2017 alone supporting the economy.
He said: “We donated N300million to the Nigeria Police because of security issue in Nigeria and likewise some other banks. We also donated N50 million to Lagos state security trust fund. In addition to that, UBA also donated N25million to four different states to help secure their states.” This he said was aside construction of roads in some villages and various supports to schools in parts of the country.
Earlier, while responding to a question on the bank’s lending to customers, the Group Chief Finance Officer at the UBA, Mr. Ugo Nwaghodoh emphasised that the core business of banking is intermediations, which he said, was why the bank grants loans to its numerous customers at rates that are very reasonable and affordable. This he noted, was despite the fact that the cost of doing business is appalling in Nigeria and in a number markets that the bank operates due to infrastructure deficit.
However, he noted that in exercising that responsibility, the banks apply caution to ensure depositor’s money is safe and secure.
He said: “The bank has the responsibility to ensure that it lends out cautiously to individuals, companies, SMEs that will do business and safely return the money. It is always a delicate balance of trying to identify bankable customers who meet your risk acceptance criteria because you have the responsibility to return the money to depositors when they come.
During recessions, you find generally that banks fold up a bit; they are not quick to lend out money because businesses are struggling, that is why you might find out that during recession, there’s not a lot of exposures.”
On the significance of the recent announcement that the top financial group’s London subsidiary had obtained the permission to operate wholesome banking activities in the United Kingdom, the Head of Investor Relations at UBA, Rasaq stated that the development will boost the bank’s earnings in 2018, further adding that with the expansion to the UK and the US, UBA would record more businesses from its operations in those jurisdictions.
“We took a decisive step to expand our business in London. We have a subsidiary in London, which is in addition to the New York office.
“To the best of our knowledge, we are the only Nigerian bank that has a deposit-taking licence in the United States. No other bank in Nigeria does that. And we say that proudly because today, we also service the correspondent banking needs of a number of Nigeria banks in the USA because of our deposit-taking licence.
“We are happy to say that 2018 going forward, you will see more business going through our UK business.”
UBA recorded gross earnings of N462 billion, a 20per cent growth in overall revenue for the year ended December 2017. The bank attributed the boost to growth in loan book and treasury assets, as well as efficient balance sheet management. Profit after tax rose N78.6 billion compared with N72.3 billion in the corresponding period of 2016. Also, profit before tax increased to N105.3 billion in 2017 compared with N90.6 billion in 2016.