Analysts at Cordros Securities Limited have increased UBA Plc target price to N58.28 per share following the group’s impressive earnings performance in the first quarter of 2025. This suggest a strong upside potential of about 70% at stock market reference price of N34.50 in the Nigerian Exchange ,NGX.
UBA gross earnings grew by 37.3% in the first quarter of the year, the performance that a slew of analysts adjusted as great start to the year. The group’s hefty top line was driven by strong income from interest yielding assets and its non-core banking operation.
In a note, analysts at Cordros Securities Limited said they have revised gross earnings forecast for 2025 upward by 330 basis points to +26.7%
Analysts reiterate positive view on the group’s non-interest income ,NII, profile, given the strong contribution of sustainable income lines such as fees and commission income.
We increase our target price by 1.5% to N58.28/s from N57.42/s and maintain our “BUY” rating”, the investment firm said in an update.
Analysts projected a final dividend per share of N5.10 in 2025, noting that UBA is trading at a 2025 price earnings ratio of 2.7x and price to book value of 0.5x.
Cordros Securities Limited anticipates UBA core earnings to rise by 24.7% year on year in 2025 on the back of still elevated interest rates, expected growth in earning assets, and the group’s diversified operations amid likely rate cuts during the year.
“We believe UBA’s international operations will continue to provide support for sustained topline growth”, the investment firm said in a review note.
Additionally, with forbearance loans declining to 5.0% as of 2024 compared with 20.0% in 2023, analysts are expecting a moderation in provisioning in 2025, resulting in a lower cost of risk of 3.0% from 3.2% in 2024.
UBA non-interest income should also expand, analysts said in the update on the Pan African lender, driven by a 26.7% year on year increase in net fees and commission.
“ we project operating income and operating expenses to grow by 25.3% and 14.8% year on year, respectively, translating to an improved cost-to-income ratio of 51.1% in 2025 versus 55.7% in 2024”.
Cordros Securities Limited forecasted UBA pretax profit to grow by 39.1% year on year, while net income is expected to grow slower by 16.7% owing to the absence of the N181.92 billion tax credit seen in 2024.
Overall, UBA earnings per share ,EPS, is projected to grow modestly by 0.3% to N21.80, reflecting the impact of 6.84 billion additional shares.
Despite the surging costs that led to deterioration in cost-to-income ratio ,CIR, across the industry, UBA recorded an improvement in its CIR to 52.9% in Q1-25 versus 57.8% in Q1-2024 following the faster growth in operating income compared to operating expenses.
Analysts at Cordros Securities Limited highlighted that the faster growth in operating income stemmed from the contribution from net fees and commission income and gains on investment securities amid the decline in its ‘other operating expenses’ line.
