United Capital Plc has released its first quarter financial scorecard , showing growth in some indicators, despite the challenges in the nations economy. Total assets increased by three per cent to N153.15 billion from N148.70 billion in the previous period. Funds under management grew by five per cent to N79.16 billion from N75.69 billion.The company’s profit after tax drop by 49 per cent to N 644.189 million from N1.25 billion reported the same period of 2018 while profit before tax went down year on year by 48 per cent to N766.868 million from N1.49 billion.The company revenue stood at N1.45 billion in 2019 first quarter from N2.20 billion, representing 34 per cent. Operating income declined year on year by 21 per cent to N1.35 billion from N1.72 billion.
The company said the the revenue declined by 34 per cent year on year owing to a decrease in income from fixed deposit and instrument securities as well as drop in other fees and charges by 26 per cent year on year and Net income down by 71 per cent year on year from the sales of financial instrument.
Analysts said that this trend was not unusual during an election year, adding there would be significant upside in the next quarter.They however said that despite the 66 per cent decline in other income, year on year, dividend income grew by 194 per cent y-o-y.On the total expenses, the company said that the group leveraged on cost savings techniques to deliver a four per cent reduction in its total expenses.The total assets which appreciated by three per cent year to date was due to the increase in money market placement- a cash and cash equivalent component as well as a two per cent increase in investment in financial assets.Cash to income ratio increased 10 per cent beyond that of the previous period to print at 51 per cent.
This was as a result of the significant drop in revenue. However steps are in the works to reduce this ratio going into the next quarter by growing revenue while containing cost.
Commenting on the group’s performance, the group chief executive officer, Mr Peter Ashade said “the quarter under review was indeed a challenging one for us as uncertainties around the 2019 general elections which took place therein plagued the capital market ( equity and Debt market), resulting in slower than expected economic activities in the first quarter of the year 2019. This was responsible in part for the reduction in the issuance of registered bonds, promissory notes and commercial papers by federal government, state governments as well as local government. More so considering the decline in the revenue of some states and a rising debt profile, many states were restricted by the provisions of section 223 (1b) of the investment and securities Act 2007 which mandates that no body to which the rule applies can issue securities in the form of promissory note provided that their outstanding loan and the proposed loan does not exceed 50 per cent of the actual revenue of the body concerned in the prior year.
All these combined led to a reduction of what could have accrued to us from advisory fees, even though we weathered the harsh conditions to increase advisory fee income by seven per cent year on year.”Also the Central Bank of Nigeria monetary policy committee reduced the MPR to 13.5 per cent from 14 per cent as a way of triggering growth and recovery late last quarter, the benefit of this however is expected to be felt all other things being equal in second quarter 2019.”Discussing further he said ” going into the second quarter of 2019, we expect that with the relative calm that followed the general elections, the pace of bond and commercial paper issuance would pick up from late second quarter to early third quarter of 2019.With shareholders interest perfectly etched on our mind, the group is confident that with its arsenal of time-tested strategies, its effect would begin to yield results in the coming quarter as we would be heading into the second quarter of 2019 with our heads held up high.
We would like to implore all stakeholders to be rest assured that we are on top of the situation as critical steps are being taken by top management to ensure a better result next quarter. “
