United Bank for Africa (UBA) Plc has delivered 374.83 per cent capital gains to investors in nearly five years, outperforming the average returns at the Nigerian stock market and the entire financial services sector.
Official data at the Nigerian stock market showed that between December 31, 2019 and December 06, 2024, UBA recorded a cumulative capital gain of 374.83 per cent during the period, representing an average annual gain of 74.97 per cent.
This implies that an investor who had invested N500, 000 in the shares of UBA at the year’s opening price for 2020, now has a real, immediate market value of more than N2.374 million, due to accumulated capital gains. This excludes accrued cash dividends over the five-year period.
UBA, which pays dividends twice a year, is reputed as an investors’ friendly stock in terms of consistent and above-average cash dividend payment. It recently paid an interim dividend of N2 per share on its first half 2024 results, the highest payout by any bank and one of the three highest yields in the entire stock market.
UBA is currently offering existing shareholders exclusive opportunities to increase their shareholdings in the bank with its ongoing N239.4 billion rights issue. The pan-African banking group is offering 6.84 billion ordinary shares of 50 kobo each to existing shareholders at N35 per share. The rights issue is pre-allotted on the basis of one new ordinary share of 50 kobo each to every five ordinary shares held as at November 05, 2024. The rights issue is scheduled to close on December 24, 2024.
The three-digit capital gain highlights UBA as a major driver of the bullish trend at the Nigerian stock market, which has sustained five years of consecutive positive returns.
The benchmark index for the Nigerian stock market, the All-Share Index (ASI), the value-based common index that tracks all share prices at the Nigerian Exchange (NGX), has shown resilience over the past five years, closing on the top chart for the world’s best performing stock markets.
Average return for Nigerian equities in 2023 stood at 45.90 per cent, among the three world’s best-performing markets. ASI had posted average returns of 19.98 per cent, 6.07 per cent and 50.03 per cent in 2022, 2021 and 2020 respectively.
Shareholders said UBA’s track records of solid financial performance, dividend policy and capital gain were competitive advantages for the pan-African banking group.
Market analysts are unanimous that share prices are illustrative of the fundamental values of quoted companies.
For the nine-month ended September 30, 2024, UBA reported 83.2 per cent growth in gross earnings to N2.398 trillion, almost double the N1.308 trillion recorded in third quarter 2023. Net profit also rose from N449.26 billion in third quarter 2023 to N525.31 billion in third quarter 2024, while earnings per share improved from N12.93 to N14.78.
Managing director, Arthur Steven Asset Management, Mr. Olatunde Amolegbe, said share pricing at the stock market thrives on a concept of ‘forward-pricing mechanism’, where investors take into consideration the potential future return based on available track records and emerging developments.
Vice president of HighCap Securities Limited, David Adonri, said share price is a reflection of the market value for a company, comprising both past performances and future expectations.
