UBA Profit Drops 22.8% in Q1 2026 as Bank Prioritises Normalisation Over Earnings Growth

Key facts

• UBA Q1 2026 gross earnings rose 5% to N801.5bn year-on-year.
• Profit after tax declined 22.8% to N146.6bn from the prior year.
• Interest income increased 6.9% to N641.1bn; non-interest income up 17.3% to N137.1bn.
• Total assets stood at N33.1tn, customer deposits at N26.2tn.
• Return on equity improved to 13.7%; return on assets at 1.77%.
• Cost of risk fell to 2.02%; cost of funds moderated to 3.73% from 3.83% in December 2025.
• UBA shares dropped 10% to N49.50 on April 27, 2026 following results release.
• The bank did not declare a final dividend for 2025 due to CBN regulatory forbearance exit.

Profit Normalisation Hits Bottom Line

a 22.8% decline in profit after tax to N146.6bn for the first quarter ended March 31, 2026, even as gross earnings climbed 5% to N801.5bn. The results, released last week alongside audited 2025 full-year figures, confirm that the bank is in a deliberate transition year, prioritising earnings quality over headline growth. Profit before tax fell 21.4% to N160.7bn, while net interest income advanced 10.5% to N383.7bn and operating income rose 12.2% to N520.8bn. The divergence between top-line growth and bottom-line contraction reflects what the bank describes as a normalisation from the exceptional FX revaluation gains that inflated 2024 earnings.

Regulatory Forbearance Exit Drove 2025 Dividend Suspension

The decision not to declare a final dividend for 2025, which surprised some investors, was driven by a Central Bank of Nigeria directive requiring banks to exit the regulatory forbearance loan window and align fully with prudential loan classification standards. Group Managing Director Oliver Alawuba explained that exiting forbearance necessitated reclassification of certain credit exposures and recognition of significant provisions. UBA prudently provided approximately N1.021 trillion in 2025, temporarily elevating its non-performing loan ratio beyond the threshold required for dividend distribution. Alawuba emphasised that the move reflects disciplined risk management, not underlying franchise weakness. The bank paid total dividends of N2.80 per share in 2023 and N3.25 per share in 2024.

Asset Quality Improves as Cost of Risk Declines

Despite the provisioning hit, UBA's asset quality metrics showed improvement in Q1 2026. The cost of risk declined significantly to 2.02%, down from elevated levels in 2025, reflecting improved asset quality and disciplined risk management. Cost of funds also moderated to 3.73% from 3.83% in December 2025, indicating improved funding efficiency. The bank's balance sheet remained robust, with total assets of N33.1tn and customer deposits of N26.2tn. Return on equity rose to 13.7% and return on assets improved to 1.77%, suggesting stronger earnings efficiency despite lower absolute profits.

Executives Affirm Transition Year Strategy

Oliver Alawuba said the Q1 performance underscores the strength of UBA's diversified pan-African model and the resilience of its core banking franchises. 'While profitability has moderated in line with our expectations for a transition year, we are seeing strong underlying momentum across our markets, supported by improved earnings quality and disciplined risk management,' he stated. Executive Director for Finance & Risk Management, Ugo Nwaghodoh, added that the results reflect a deliberate shift towards a more sustainable and scalable earnings profile following the bank's successful recapitalisation. He noted that key profitability indicators improved on a year-to-date basis despite headline earnings normalisation.

Market Reacts with 10% Share Price Drop

The market reacted sharply to the results, with UBA shares falling 10% to N49.50 on Monday, April 27, 2026, from the previous Friday's closing price of N55. The decline reflects investor disappointment over the profit drop and dividend suspension, though analysts note that the 2024 base was inflated by one-off FX revaluation gains. Full-year 2025 profit before tax dropped 47% to N423.4bn, while profit after tax declined to N404.7bn. Earnings per share fell 55% to N9.66. However, these figures largely reflect the absence of the windfall gains that boosted 2024 results, rather than operational deterioration.

Recovery Efforts Underway to Restore Dividend Payments

UBA confirmed it is actively pursuing recovery of impacted loan exposures and has instituted robust mechanisms to drive collections and restructuring. Alawuba said these efforts are expected to result in write-backs as recoveries materialise, supporting normalisation of asset quality metrics. 'The good news is that these are recoverable assets. As we make progress on recoveries, we expect to see improvements in our non-performing loan ratio and position the bank for a return to dividend payments,' he added. The bank expects 2026 to remain a transition year, with continued investment in digital transformation, operational scalability, strengthened risk management, and deeper penetration across African markets.

Pan-African Reach Underpins Long-Term Outlook

United Bank for Africa serves over 45 million customers through 1,000 business offices and customer touchpoints in 20 African countries, with additional operations in New York, London, Paris, and Dubai. The group's diversified revenue base, which saw non-interest income grow 17.3% in Q1, provides a buffer against earnings volatility in any single market. Alawuba reiterated the bank's commitment to driving financial inclusion, enabling intra-African trade, and delivering superior value to stakeholders. With stable funding costs, improving asset quality, and a strong capital position, UBA says it is well-positioned to drive operating leverage and long-term value creation once the transition period concludes.

The bottom line

• UBA's Q1 2026 profit after tax fell 22.8% to N146.6bn, but gross earnings rose 5% to N801.5bn, reflecting a deliberate normalisation from 2024's FX-driven windfall.
• The bank did not declare a final dividend for 2025 after providing N1.021 trillion to exit CBN's regulatory forbearance regime, elevating NPLs temporarily.
• Asset quality improved in Q1, with cost of risk falling to 2.02% and cost of funds moderating to 3.73%.
• Shares dropped 10% to N49.50 on April 27, 2026, as investors reacted to profit decline and dividend suspension.
• UBA expects recoveries on impacted loans to drive write-backs and restore dividend payments in future periods.
• The bank's pan-African model and diversified revenue base support its long-term growth agenda despite near-term earnings normalisation.