Dear Afrinvestor,

Please find below our Research Note expressing our initial thoughts on the recently released Q3 2012 results by UBA Plc.

UBA recently announced its unaudited Q3 2012 results; the lender recorded a 21.4% (y-o-y) growth in Gross   Earnings to N168.2bn from N138.5bn in Q3 2011, while pre and post tax profits accelerated by 376.1% and 429.7% from N9.4bn and N7.4bn in Q3 2011 to N44.9bn and N39.1bn respectively. A further breakdown of the results on a quarterly basis, show that Q3 2012 contributed 34.0% to Gross Earnings, marginally better than the 33.9% grossed in Q2 and 6.2% more than the N53.9bn in Q1 2012.

The growth in non-interest income (driven primarily by income from trading, fees and commission) was largely responsible for the improvement in UBA’s top line (21.9% y-on-y growth), while the drop in margins can be credited to a 19.0% increase in operating expenses (driven by other operating expenses) between Q3 2012 and Q3 2011 compared to the 13.9% rise in operating income over the same period.

UBA now trades at a P/BV of 0.9x, a 37.2% discount to its peer average of 1.4x with an ROAE 27.1%. We reiterate our BUY recommendation on the stock with a 12month price target of N7.67, representing a 35.8% upside on the current market price of N5.65.