United Capital Plc earned an after-tax profit of N3.3 billion from its third-quarter operations, speeding up further from a strong second quarter and the half-year close of N4.4 billion. The numbers add up to an after-tax profit of N7.7 billion for the company’s nine months of trading with the third quarter accounting for 43 percent of the profit.
The third quarter interim report of the financial and investment services group shows sustainable growth in earnings for the third straight year since 2020. The third quarter saw stable growth in revenue with rising costs led by net impairment charges on credit losses.
Some gains on both sides of income and cost-saving however helped the company to stretch out profit margin from 47.8 at half year to 53 at the end of the third quarter.
The company’s third-quarter position shows gross earnings of over N14.55 billion, which is an increase of 28 percent year-on-year. Other income took the lead on revenue growth, advancing from N247 million to N1.1 billion year-on-year.
Net trading income also grew rapidly from N15.5 million to N611 million over the review period. Fee and commission income accelerated from 24 percent growth at half a year to 31.4 percent to stand at N6.3 billion in the third quarter.
Investment income amounted to N6.6 billion at the end of September, representing an increase of 5 per cent year-on-year. Net gains on financial assets, which led revenue growth at half a year, overturned into a negative of N74 million at the end of the third quarter.
An upward cost pressure came from net impairment expenses that grew by 77.4 per cent year-on-year to almost N1 billion. That pushed total expenses to an increase of 35.5 per cent to N5.7 billion. That is a change of direction from total expenses growing below gross earnings in the second quarter to growing ahead of it at the end of the third quarter.
The operating cost margin increased from 37.4 per cent in the same period last year to 39.5 per cent at the end of September 2022.
With the cost increase, operating profit slowed down from a 35 per cent increase at half year to 24 per cent growth at the end of the third quarter to close at N8.8 billion.
Two favorable developments tempered the impact of the increase in operating costs on the bottom line. These are accumulated associate profits of N318 million that came like a windfall and a moderated growth of less than 24 per cent in tax expenses.
The two developments made a big difference in the bottom line, stepping up the 24 per cent growth in operating profit to a 29 percent improvement in after-tax profit. They provided the strength for the improvement in profit margin at the end of the third quarter.
The company’s investment portfolio has improved from N268 billion at half a year to N324 billion at the end of the third quarter. It still stays down from the closing figure of N363.6 billion at the end of last year.
The company’s after-tax profit of N7.7 billion at the end of the third quarter is an increase of 29 per cent year-on-year, slowing from 41 percent growth at the half year.
The company closed the third quarter operations with earnings per share of N1.71, which is an increase from N1.31 per share in the same period in 2021.
It is expected that the company’s final quarter would contribute more to the bottom line than the previous quarters. Last year, up to 47 per cent of the full-year profit of N11.3 billion was generated in the final quarter.
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