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Banking Sector

Union Bank Grows Profit Before Tax by 2.8 Percent to N25.4 Billion in 2020

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Union Bank of Nigeria Plc, one of Nigeria’s leading banks, grew profit before tax by 2.8 percent from N24.7 billion in 2019 to N25.4 billion in the 2020 financial year.

The bank disclosed in the audited financial statements released on Thursday through the Nigerian Stock Exchange.

The bank said various investments in technology and building a progressive work culture in the last eight years helped navigate COVID-19 challenges as staff were able to effectively transition to remote working while still maintaining the strong performance required to provide these solid results.

Union Bank Financial Highlights for 2020:

● Profit before tax: up 2.8% to N25.4bn (N24.7bn in FY 2019).
● Gross earnings: down 1.9% to N156.9bn (N159.9bn in FY 2019).
● Net operating income after impairments: up 8.3% to N103.4bn (N95.5bn in FY 2019).
● Net interest income before impairment: up 10.1% to N56.9bn (N51.7bn in FY 2019) due to reduced interest expenses.
● Non-interest income: up 1.6% to N44bn (N43.3bn in 2019) driven by growth in net trading income as well as revaluation gains.
● Operating expenses: up 10% to N78bn (N70.8bn in FY 2019) due to an increase in regulatory and technology expenses.
● Gross loans: up 23.8% to N736.7bn (N595.3bn in FY 2019) driven by targeted lending to key sectors of the economy.
● Customer deposits: up 27.6% to N1,131.1bn (N886.3bn in FY 2019) reflecting our agility in delivering a compelling range of products to our customers during the pandemic and increased adoption of our digital channels.
● Non-performing loans ratio: down to 4% from 5.8% (FY 2019) driven by a disciplined recoveries strategy (N7.2bn in 2020), a more robust loan book and key restructurings to support customers during the pandemic.

Speaking on the performance, the Chief Executive Officer, Emeka Emuwa, said: “The Bank has delivered a strong set of results notwithstanding the impact of COVID-19 on our operations and the wider economy, enabling the Board of Directors to continue to return value to shareholders with a proposed dividend payment for the second year in a row. This demonstrates the strong foundations we have built, as we continue to deliver against our target of becoming a leading financial institution in Nigeria.

For the full year, we grew across key income lines. Net income after impairments grew 8.3% from ₦95.5bn to ₦103.4bn and translated into 2.8% growth in Profit Before Tax to ₦25.4bn from ₦24.7bn.

“The core of this performance is driven by the growth in our loan book, with 23.8% increase in gross loans, to ₦736.7bn from ₦595.3bn in 2019.

“The pandemic accelerated trends in customer behaviour and we have seen rapid increase in digital adoption with a 38% YOY increase in active users on our UnionMobile channel with total active users now at 2.9 million. Our UnionOne and Union360 platforms for businesses grew by 11% from 25,000 users to 27,700 users. 94% of transactions in the Bank are now done digitally, up from 89% in 2019.

“We also aggressively grew UnionDirect (our agent network) by 6x from 3,100 to 18,100 in line with our focus on our retail business. With our investments yielding positive results, we are well positioned as a strong leader in the retail and digital space.

“In 2021, the Bank will focus on enhancing revenues and shareholder value by revving up customer acquisition, engagement and transactions through seamless customer journeys and an optimized service delivery platform.

“As I retire following eight years of rebuilding and repositioning this storied institution, I am convinced that with the excellent management team and a clear strategy in place, Union Bank is well positioned to continue to compete and deliver value to its shareholders.”

Speaking on the FY 2020 numbers, Chief Financial Officer, Joe Mbulu said: “We are pleased with both our top and bottom-line performance in 2020, in light of the impact of the pandemic and economic challenges. Significant inflationary pressures and the translation of currency depreciation drove growth in our cost base, however we maintained strong control, limiting operating expense increase to 10% (₦77.9bn from ₦70.8bn), well below the rate of inflation. Consequently, we saw marginal increase in our cost to income ratio to 75.4% from 74.1%.

“Our customer deposits hit a milestone during the year, crossing the ₦1tr mark to ₦1,131.1bn from ₦886.3bn in FY 2019, an increase of 27.1%. Low cost deposits were up by 17%, constituting 68% of total deposits helping to push cost of funds down by 1.4%.

“We continued to proactively manage our growing risk asset portfolio and recorded better asset quality, with our NPL ratio improving from 5.8% to 4.0%. This achievement, combined with a solid capital adequacy at 17.5% and continued top-line growth, provides the platform for strong growth going forward.

“We will continue to grow our loan portfolio in 2021, which we expect to be a significant driver of growth, combined with our value chain synergies across our business which will drive customer and transaction growth during the year and beyond.

“Our UBUK subsidiary remains classified as “Available for Sale” as the sale process continues albeit delayed due to the pandemic-induced lockdowns”

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

Wema Bank, MOD Launch Scheme For International Students

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Wema Bank Logo

Wema Bank has launched an advisory and loan scheme, the Education Advisory Service, in partnership with MOD Education for young Nigerians wishing to study abroad.

Following foreign exchange control measures introduced by the government, parents and guardians have experienced difficulties paying tuition fees for their children and wards studying abroad. Some who have the money don’t know the requirements for foreign admission and waste lots of time and resources in fruitless searches.

But to help them surmount these challenges, Wema Bank has partnered with MOD Education, a professional student advisory, marketing, recruitment and placement company for the advisory services and school fees advance facility. The partnership, which was launched on Friday, April 9 at Eko Hotels, Victoria Island, will see both organizations providing innovative education advisory services and funds for international students.

Speaking about the partnership, Divisional Head, Retail Business, Wema Bank, Dotun Ifebogun, explained that the initiative would aid hundreds of thousands of Nigerians requiring advisory and financial support to pay for their wards in foreign schools.

He explained that Wema Bank does not want the aspirations of Nigerians desirous of foreign education truncated, hence the support.

“We are interested in everything that concerns our customers, and education is one of them. Some parents and guardians desire a certain quality of education for their wards outside the shores of Nigeria, and we would be able to assist them with this product. Our school fees advance loan results from the requests of parents and guardians who need to get short term financial support to meet the tuition obligation of their wards irrespective of the constant increase in fees.

“There’s nothing as heartbreaking as withdrawing a child already in a foreign university or being unable to raise the requisite forex for a child offered admission in a top-rated foreign institution of higher learning. But our school fees advance loan will take care of this problem and help secure the futures of such students – both undergraduates and postgraduates. The fact that you get counsel from the right sources at any particular time is another benefit of this product.

Also, the Managing Director, MOD Education, Michael Dosunmu, expressed gratitude to Wema Bank for the partnership. “Wema Bank has been supportive to us as a business and it was just a natural marriage. We trust the bank enough to bank with them, and our trust is enough to recommend it to others.”

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Banking Sector

UBA Organises Capacity Building Forum

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UBA Insider dealings

As part of its commitment to support the growth and sustainability of micro, small and medium-scale enterprises (MSME) in the continent, the United Bank for Africa (UBA) Plc, is set to organise the next edition of its UBA Business Series.

The UBA Business Series which is a monthly event, is an MSME Workshop as well as a capacity building initiative of the bank where business leaders and professionals share well-researched insights on best practices for running successful businesses, especially in the face of the difficult operating environment that dominates the African business landscape.

Through this initiative, UBA has been assisting with essential tips to help businesses re-examine their models and strategies and ensure that they stay afloat and remain thriving, a statement from the bank explained.

The topic for the next edition of the series is, “Managing Performance for Business Growth,” and it will be held today, via Microsoft Teams.

At this session, the Managing Director, Secure ID Limited, Mrs Kofo Akinkugbe, will be sharing useful tips and insights on the key strategies of performance management to boost business growth.

Akinkugbe is the founder of SecureID Nigeria, a MasterCard, VISA and Verve certified Smartcard Personalization Bureau and Digital Technology company. She currently serves as the Managing Director/CEO, Secure Card Manufacturing, – a Smartcard manufacturing plant producing high security identity cards and documents for the Banking, Telecoms and Public sectors across Africa and beyond.

UBA’s Head, SME Banking, Sampson Aneke said of Akinkugbe, “with her vast experience garnered over the years from various sectors, she will help business owners understand how performance management strategies can be effectively implemented to ensure business growth.”

He emphasised UBA’s commitment and deep passion for small businesses, which according to him, remains the engine of any developing economy adding, “We know small businesses are the backbone of the economy in every country. In many climes, businesses with fewer than 100 employees account for 98.2 per cent of all businesses. This no doubt captures the importance of SMEs to a thriving economy which is why UBA is committed to seeing them flourish.”

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Banking Sector

CBN to Extend Credit Risk Management System to OFIs

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In an effort to curb growing bad debt, the Central Bank of Nigeria has said it will extend its Credit Risk Management System to Other Financial Institutions (OFIs) operating in Nigeria to protect them from bad debtors.

According to the apex bank, this is important following the successful implementation of the credit risk system in other lending institutions operating in Nigeria.

The bank disclosed this in a circular titled ‘Credit Risk Management System: Commencement of enrolment of all Development Finance Institutions, Microfinance Banks, Primary Mortgage Banks and Finance Companies’ and signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, on Monday.

In part, the circular read, “As part of efforts to promote a safe and sound financial system in Nigeria, the CBN introduced the CRMS to improve credit risk management in commercial, merchant and non-interest banks as well as to prevent predatory borrowers from undermining the banking system.

“With the successful implementation of the CRMS in deposit money banks, it has become expedient to commence the enrolment of Other Financial Institutions on the CTMS platform.

“Accordingly, all DFIs, MfBs, PMBs and FCs are required to report all credit facilities (principal and interest) to the CRMs and to update same on monthly basis.

“OFIs shall note the Bank Verification Numbers and Tax Identification Numbers are the only basis for regulatory renditions”.

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