United Capital Plc is keeping earnings on a high growth trajectory for the third year running in 2022. Its first-quarter operations closed with a 39 per cent growth in after-tax profit to N2.3 billion. This is sustaining the top growth record of the financial and investment services group so far since 2020.
The company had grown after-tax profit by 57 per cent in 2020 and 44 per cent in 2021 on strong revenue growth and effective check on costs. The strength in revenue performance that improved profit margin in the preceding years is still going for the company in the current financial year.
The company’s first-quarter report at the end of March 2022 shows gross earnings of N4.2 billion, which is an increase of 35 per cent compared to the same period in the preceding financial year.
However, the room for cost saving was not open to the company in the first quarter. Total expenses grew ahead of gross earnings at 43.5 per cent compared to 35 per cent over the period. This is a change of direction from last year’s position when total operating cost grew well below gross income at 20.6 per cent compared to 40 per cent.
The cost increase in the first quarter was led by other operating expenses that rose by 60.5 per cent to N925 million.
Revenue growth for the company continues to be led by other income, which is sustaining exceptional growth for the second year. Other income multiplied 27 and half times to N517 million over the review period. This is after a four times jump at the end of the 2021 operations to close at N1.6 billion for the full year.
Net gain on financial assets followed on the earnings growth track from zero records in the same period last year to over N147 million at the end of the first quarter. Fee and commission income, the company’s biggest revenue line during the period, rose by 32 per cent to N1.7 billion, beating investment income – which grew marginally by 3 per cent to N1.6 billion over the same period.
The only drawback on the revenue side is net trading income that reversed from 57 per cent growth at the end of last year to a decline of 15 per cent to about N160 million.
The company’s investment portfolio is slimming down after a remarkable expansion last year. Investment assets dropped by 14 per cent to N312.5 million, a downswing from over 150 per cent growth at the end of 2021.
The encroachment of cost limited the improvement of operating profit by 30 per cent to N2.6 billion against the 35 per cent growth in revenue. The impact was however remedied by a windfall from a share of accumulated associate profit of N120 million received during the quarter.
The inflow jerked up pre-tax profit by 36 per cent to roughly N2.6 billion at the end of the quarter while a moderated growth of 20 per cent in tax expenses to N379 million pushed up after-tax profit to a 39 per cent growth to N2.3 billion for the quarter.
The result is that the company’s ability to convert revenue into profit improved in the first quarter. The net profit margin increased from 53 per cent to 54.8 per cent over the review period.
United Capital continues to maintain one of the highest profit margins among Nigeria’s listed companies. Its first-quarter record is however a decline from last year’s closing net profit margin of 62.3 per cent.
The company closed the first quarter of operations with earnings per share of 38 kobo, which is an increase from 27 kobos per share in the same quarter last year.
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