Union Bank Reports 10% Decline in Profit After Tax in 2021

Union Bank Plc reported a 10% decline in profit after tax from N18.672 billion filed in 2020 to N16.919 billion in the financial year ended December 31, 2021.

The bank disclosed this in its audited financial statement obtained by Investors King.

Net operating income after impairments dropped by 3.6% from N103.4 billion recorded in 2020 to N99.7 billion in the period under review.

Union Bank 2021 Financial Highlights:

● Gross earnings: up 8.9% to ₦175.0bn (₦160.7bn in FY 2020), driven by strong noninterest income.

● Non-interest income: up 26.7% to ₦55.7bn (₦44.0bn in FY 2020) driven by significant increases in debt recoveries.

● Net operating income after impairments: down 3.6% to ₦99.7bn (₦103.4bn in FY 2020).

● Profit before tax: down by 19.3% to ₦20.5bn (₦25.4bn in 2020).

● Operating expenses: marginally grew by 1.5% to ₦79.1bn (₦78.0bn in FY 2020), reflecting tight cost control despite inflationary pressures.

● Gross loans: up 22% at ₦899.1bn (₦736.7bn in Dec 2020) as we expand our lending to key economic sectors of opportunity.

● Customer deposits: up 20.4% at ₦1.4trillion (₦1.1 trillion in Dec 2020) as we continue to expand our product base and digital channels.

Commenting on the results, Emeka Okonkwo, CEO said: “Following an enhancement to our operating and go-to-market model to deliver better performance and efficiency leveraging our network across the regions, we are increasing our customer engagement and product penetration which is translating into higher customer revenues across geographies.

“On the back of this, the Bank has continued to record headline growth by diversifying our income streams and accelerating our recoveries programme.

“For the full year, our gross earnings grew by 8.9% from N161bn to N175bn, while our net operating income after impairments dropped by 3.6% to N99.7bn from N103.4bn. Interest income grew by 1% as our earnings asset base expanded with a growing loan book.

“We continued our strong growth in non-interest income through a combination of aggressive recoveries, which grew 119% in the period, from N7.2bn to N15.9bn and further growth in fee and commission income (33%) and e-business (26%). These were delivered on the back of sustained multi-channel growth in users, volume and value across our digital and agent channels. Total active UnionMobile users now stands at 3.3 million, up 20% while our Union360 customer base grew by 22% to 26,400.

“In 2022, the Bank will continue to focus on broadening and deepening the strong foundations we have built, while enhancing our digital delivery platforms and service propositions to customers. We remain deeply thankful to our erstwhile core investors, Union Global Partners and Atlas Mara who have been instrumental to our journey since 2012. Their invaluable support and expertise helped steer the Bank through turbulent waters and into an era of
growth and stability. As we turn a new chapter for our Bank with a new core investor expected to come on board,
we are proud of the solid foundation built over the last ten years and look forward to a seamless transition and continued successes in the future.”

Speaking on the FY 2021 numbers, Chief Financial Officer Joe Mbulu said: “We maintained very strong cost controls during the year despite the inflationary pressures and the translation effect of currency depreciation on our cost base. Operating expenses increased marginally by 1.5% with increasing regulatory, depreciation and amortisation costs.

“Customer deposits grew by 20% while our loan book grew by 22% from N736.7bn to N899.1bn, as we deepened support for key sectors in the economy. We have been remained proactive in the way we manage our growing risk assets, maintaining our asset quality during the year with our NPL ratio growing marginally from 4% to 4.3%.”