Financial services and investment group United Capital increased its turnover by about half to N26.9 billion last year, its biggest revenue since its inception 21 years ago.
But PREMIUM TIMES’ financial analysis shows that milepost cannot raise profits because it needs to meet certain expenses.
The parent company divorced from United Bank for Africa in 2022 and now runs alone, depending on income from its flagship investment banking division to drive growth in the top line in a year when income from managed funds was particularly strong.
Investment income increased by 55.3 percent to N13.8 billion, while fees and commission income at N8.1 billion increased by 31.9 percent.
United Capital, whose offerings also include issuing housing services, asset & wealth management, M&A, trusts and brokerage, owes the debt to higher financial advisory fees as well as other management fees & commissions.
Profits took the biggest blow from the need to set aside as much as N6.2 billion of revenue to cover loans granted by institutions, which only have a slim chance to get repaid.
That compares with N453.5 million allocated for the purpose in the same period in 2021, the audited financial statements published on Wednesday showed.
United Capital runs a consumer finance unit UCPlus Advance Limited that lends to customers using a digital platform. The company told PREMIUM TIMES it is set to officially launch its digital banking subsidiary.
Profit before tax rose to N13.5 billion from N11.9 billion. Taxes increased by almost five times to N3.8 billion, undermining the net profit which, at N9.7 billion, was 14.3 percent weaker than the 2021 level.
“We remain optimistic about sustaining our performance in 2023 after starting the year in a strong financial position with funds close to N1 trillion under management,” CEO Peter Ashade said in another document providing performance highlights.
A note was also issued on Wednesday detailing the Board’s plan to pay a dividend of N1.50 per share for the year, amounting to N9 billion paid, the same amount paid for 2021.
Shares in the company had fallen 3.9 percent by the close of trade in Lagos on Wednesday.
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