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Union Bank Grows Profit Before Tax by 2% to N15.9 billion in Nine Months

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Union bank - Investors King

Union Bank of Nigeria Plc, one of the oldest banks in Nigeria, grew profit before tax by 2 percent to N15.9 billion in the nine months ended September 2020, up from N15.5 billion posted in the first nine months of 2019.

In the unaudited financial statements of the bank, gross earnings rose by 6 percent from N111.9 billion in the corresponding period to N118.8 billion in 2020. Largely driven by the increase in earning assets.

Interest income expanded by 1 percent to N85.4 billion from N84.9 billion in the nine months ended September 2019.

Net interest income before impairment rose by 15 percent from N36.4 billion achieved in the first nine months of 2019 to N41.7 billion in the period under review.

Non-interest income appreciated by 23 percent to N33.4 billion from N27.1 billion filed in the corresponding period of 2019.

Union Bank’s net operating income stood at N69.3 billion in the period under review, representing a 1 percent growth from N68.7 billion filed in the same period of 2019.

Operating expense was largely flat at N53.4 billion, slightly higher than the N53.2 billion posted in the corresponding period of 2019 despite currency depreciation, inflationary pressures and unplanned Covid-19 related expenses.

Gross loans rose 14 percent to N678.0 billion from N595.3 billion achieved in Dec 2019. This reflects the banks growing credit facility to the real sector of the economy.

Similarly, customer deposits expanded by 28 percent to N1.1 trillion from N886.3 billion in Dec 2019. The bank attributed the improvement to gains on investments in customer-led products and digital channels which resulted in the acquisition of over 600,000 new-to-bank customers and deepening of wallet share of existing customers.

Speaking on the performance, Emeka Emuwa, CEO said: “Notwithstanding the realities of a tougher operating environment arising from the ripple effects of the Covid-19 pandemic, the Bank delivered a 6% growth in gross earnings from ₦111.9 billion in 9M 2019 to ₦118.8 billion in 9M 2020. In addition, net interest income before impairment rose by 15% to ₦41.7 billion, while non-interest income grew by 23% to ₦33.4 billion.

“We reached a major milestone as our customer deposits crossed the ₦1 trillion mark this quarter, growing by 28% to ₦1.1 trillion compared to ₦886.3 billion at the end of 2019. This reflects increasing customer loyalty and our intense retail drive. Our customer acquisition strategy has been reinforced by the versatility of our digital platforms and channels which continue to drive customer satisfaction.

“We grew our loan book by 14% to ₦678.0 billion from ₦595.3 billion in December 2019 as we cautiously extended credit to the real sector. We will continue to explore bankable lending opportunities in the Nigerian economy guided by our robust risk management practices.

“The civil unrest which erupted in October and led to significant destruction of property and small businesses across the country, will have real impact on business and the operating environment; and even as restrictions have eased, Covid-19 also remains a present threat in our day to day operations.

“Heading into the final stretch in 2020, our overarching commitment is to the health and wellbeing of our employees and the safety of our customers. Showing up for our communities is also at the core of who we are and therefore we will work with our partners and through our corporate citizenship initiatives to support individuals, businesses and our communities where we operate as we begin to rebuild and heal as a country.”

Also commenting was the Chief Financial Officer, Joe Mbulu, who said: “Union Bank’s nine-month results reflect the strength and resilience of the business. Our Profit Before Tax (PBT) grew by 2% to N15.9 billion, from N15.5 billion in the previous period.

“Our operating expenses were relatively flat year-on-year at ₦53.4 billion, compared to ₦53.2 billion in 9M 2019 despite inflationary pressures on cost and higher regulatory costs. This reflects continuing focus on cost management.

“Our asset quality continues to improve with Non-Performing Loans (NPLs) down to 3.6% from 5.8% as at December 2019, supported by ongoing efforts to diversify our loan book to include viable businesses and households. Our Capital Adequacy Ratio remains robust at 19.5%, well above the regulatory threshold.

“With the $40 million (USD) financing secured from the International Finance Corporation for on-lending to trade finance customers, we are continuing to expand our funding engagements with DFIs to support our strategic business initiatives.

For the rest of the year, we remain focused on our business priorities in the face of the Covid-19 challenge and will continue to leverage increasing customer loyalty, stronger digital platforms and channels as well as solid risk management structure to deliver on our objectives.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Banking Sector

FINANCIAL LITERACY: Unity Bank Kick-Starts One Minute Genius 2.0

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Unity bank

In its drive to boost financial literacy among students in primary and secondary schools across the nation, Nigerian lender, Unity Bank Plc has flagged off Season 2 of its pioneer educational gameplay, the One Minute Genius, OMG.

The OMG 2.0 gameplay, which kicked off on May 3, 2021, on the Unity Bank’s Website is an expanded version of the maiden edition to be played virtually.

Over 200 winners will emerge at the end of the 25-day contest. To win prizes in any of the categories, participating students can play the virtual game from Monday to Friday between 8 AM – 6 PM.

The One Minute Genius (OMG) is an initiative that underscores Unity Bank’s commitment to the development of the next generation, as it seeks to connect with their aspirations and reinforce the importance of education as a vehicle to empower the Nigerian child. Children and students between the ages of 6 –17 years can participate in the game.

According to the Divisional Head, Retail/SME & E-business, Unity Bank Plc, Mr. Olufunwa Akinmade, the idea is to enable the participants to improve their intelligence quotient and unleash the genius in them.

Mr. Olufunwa further explained that the game will be played as a blend of quizzes containing spelling Bee and Arithmetic questions. “The children that answer the questions correctly within the one-minute stipulated timeframe will be rewarded with cash prizes”, he quips.

Throwing more light on the initiative, Mr. Olufunwa said, “the Bank has decided to continue investing in the gameplay because it is pleased with the impact which the previous editions of the contest had created being a vehicle for reinvigorating the values of education through gamification and fun”.

Still speaking, Mr, Olufunwa stated: “Unity Bank remains committed to playing a critical role in advancing learning for a better society by developing the minds of our children. And this virtual, participatory learning and reward contest has proved quite effective in achieving the goals of motivating the students towards subject mastery using a branch of reinforcement model”

He added: “On the heels of COVID-19 pandemic, which has impacted negatively on the education sector in Nigeria by disrupted learning, an activity such as the OMG provides a veritable opportunity to boost learning, even as all stakeholders continue to make deliberate efforts to cater to the needs of our future generation.

“We hope that parents and guardians will encourage their wards with every support needed to enable the students to explore the opportunity that this provides.”

Recall that the 2o20 edition of the OMG attracted massive interests from across Nigeria, producing no fewer than 120 winners who coasted home with millions of naira in cash rewards.

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Finance

FG Borrowed $5.9B To Fight COVID-19 and Implement Budget – Minister of Finance

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Zainab Ahmed

The federal government borrowed about $5.9 billion in 2020, to tackle the COVID-19 pandemic and implement its budget. The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, revealed this yesterday.

A statement issued by her Special Adviser, Media and Communications, Mr. Yunusa Abdullahi, yesterday, indicated that the minister told the Collaborative Africa Budget Reform Initiative (CABRI) General Assembly during a webinar, that the federal government had to move quickly to save the economy.

Speaking on Nigeria’s fiscal response – short term interventions and impact on public finances, as an immediate fiscal response, Mrs. Ahmed said: “We did the following: Procured a $3.4 billion loan from the International Monetary Fund (IMF) and about $2.5 billion in local currency from the domestic capital market to support the 2020 budget implementation), among others.”

She noted that the government then packaged a N500 billion for COVID-19 Crisis Intervention Fund in the 2020 revised budget, as part of a N2.3 trillion Economic Sustainability Plan.

Mrs. Ahmed said that the government had begun the process of moving the economy away from its primary dependence on oil for revenues and foreign exchange, and making steady gains in addressing infrastructure and human capital challenges before the pandemic hit the global economy.

With COVID-19, Nigeria’s Bonny Light crude oil price fell from a peak of US$72.2 per barrel on January 7, 2020 to below US$20 by April 2020.

She said, “In effect, the US$57 crude oil price benchmark approved in the 2020 budget became unrealistic triggering the need to adjust the following variables: reduction of crude oil benchmark price from US$57 per barrel to US$28 per barrel; reduction of daily crude oil production benchmark from 2.18 million barrels per day (mbpd) to 1.9 mbpd; adjustment of the official exchange rate to N360/US$1 from N305/$.”

Mrs. Ahmed revealed that part of the federal government Supplementary Budget on COVID-19 would be spent on the procurement of 29. 588 million doses of the Johnson & Johnson vaccine.

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Banking Sector

Union Bank CEO, Godson Chukwuemeka Okonkwo Acquires 2.4 Million Shares in the Bank Ahead of Acquisition

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Union bank - Investors King

The Chief Executive Officer, Union Bank Plc, Godson Chukwuemeka Okonkwo, has purchased 2,431,917 ordinary shares of the bank, according to the latest disclosure filing from the lender.

The CEO acquired the 2,431,917 shares of Union Bank at N4.90 per share on Thursday 6th May 2021 from the floor of the Nigerian Exchange Ltd.

Okonkwo’s N11.916 million investment was after Investors King reported a possible acquisition of the bank by Zenith Bank or Access Bank following sources cited by Bloomberg.

Bloomberg said, “Atlas Mara Limited, the London Stock Exchange-listed pan-African banking group started by Mr. Bob Diamond has received a number of approaches for its 49.97 per cent holding in Lagos-based Union Bank of Nigeria.”

It also stated that Atlas Mara received interests from Nigerian and Middle Eastern lenders for its remaining assets on the continent, according to Bloomberg sources.

The sources claimed the banks in talks with Atlas Mara asked not to be identified as talks are private. But they mentioned Nigeria’s Zenith Bank Plc, Access Bank Plc and Morocco’s Attijariwafa Bank as some of the banks that have so far expressed interests in acquiring Union Bank.

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