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H1 2022: Union Bank of Nigeria’s total assets tumble by 2.1% to N2.54trn

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By Philemon Adedeji

Union Bank of Nigeria Plc has declared its unaudited results for the period ended  June 30, 2022 with total assets dropping by 2.1 per cent to N2.54trillion as of June 30, from N2.6 trillion achieved in the half (H1) 2021.

The unaudited H1 2022 financial results submitted to the Nigerian Exchange Limited (NGX), revealed that liabilities dropped by 2.9 per cent to N2.260 trillion as of June 30 2022, from N2.328 trillion in 2021, amid 16.9 per cent increase in current tax liabilities to N1.660 trillion as of June 30 2022 from N2.328 trillion in  2021.

The key highlights of the financial statements under total assets showed a decline in property and equipment to 4.7 per cent as of June 30th, 2022 to N54.955 billion from N57.673 billion derived in 2021.

Also the rate at which the bank offered loans and advances to customers depreciated to a 0.4 per cent to N865 billion as of June 30 2022 from N868 billion loan offered to customers in 2021 full financial year.

Other key highlights of the financial statement include a seven per cent growth in customers deposit which rose significantly to N1.450 trillion as of June 30, 2022 from N1.356 trillion in 2021.

However, Union Bank of Nigeria’s Profit After Tax (PAT) rose by 12.6 per cent to N11.074 billion in H1 2022 from N9.836 billion achieved in H1 2021

Profit Before Tax (PBT), recorded for the period increased by 6.7 per cent to close at N12.3 billion in H1 2022 from N11.594 billion in H1 2021.

Similarly, net interest income recorded during the period under review gained a 30.7 per cent to N35.636 billion in H1 2022 from N27.260 billion in H1 2021. As operating income recorded by the group increased to 3.6 per cent to N49.901 billion H1 2022 from N48.147 billion accounted in H1 2021.

Net interest income after impairment charge for credit losses recorded by the group largely increased to N28.7 billion in H1 2022 from N20.338 billion in H1 2021, reflecting an improvement of 41.1 per cent.

Specifically, the growth in profit drives gross earnings increased to N87.725 billion in H1 2022 from N77.798 billion in H1 2021, representing an increase of 12.8 per cent.

The group unaudited result showed total equity of N266.9 billion recorded in H1 2021 to N280.5 billion in the comparable period of 2021, Union Bank of Nigeria has recorded a 5.1 per cent growth in total equity during the half year 2022.

In addition, Union Bank operating expenses recorded for the H1 2022 stood at N37.4 billion as compared to N36.9 billion achieved in H1 2021, reflecting a growth of 1.4 per cent

While commenting on the results, CEO, Union Bank of Nigeria, Mudassir Amray in a statement said, “Following the successful acquisition of majority shares of the bank by Titan Trust Bank, we are now focused on strengthening the core business and improving operational efficiencies across board.

“In parallel, we are going full throttle on integrating the two banks to form a ‘stronger Union’ positioned to deliver value to all stakeholders, leveraging technology and digital innovation. The integration is expected to be completed by the end of the third quarter.

“In H1 2022, compared to H1 2021, the bank’s gross earnings, net interest income and Profit Before Tax grew by 12.5 per cent, 41 per cent, and 6.7 per cent respectively. Since taking the reins as Chief Executive Officer as at June 2, 2022, I am confident that the bank has all the necessary ingredients to be a tier 1 bank,” he said.

“As we drive towards a seamless integration in the second half of the year, we remain committed to achieving our business objectives. We are excited about exploiting the synergies from the newly expanded franchise post integration,” Amray added.

Speaking on the H1 2022 numbers, Chief Financial Officer, Joe Mbulu said, “We have continued to deliver improved efficiency, enabling growth in PBT, which grew by 6.7per cent to N12.3billion.

“Net Interest Income increased by 41 per cent during the period, driven by interest income which grew from N47.7billion to N64.3billion during H1 2022. The rise in interest income was underpinned by growth in loans/advances which rose by 24percent,” he added.

“Despite inflationary pressures, our strong cost management model continues to yield dividends. Operating expenses grew slightly by only 1.4 per cent to N37.3billion from N36.3billion. Deposits increased by seven per cent to N1.5 trillion while our risk assets dropped slightly by 0.4 per cent to N889.1billion from N895.3billion as at year-end 2021.

“Our capital and liquidity positions remained above regulatory levels, with capital adequacy ratio (CAR) at 16.4 per cent and liquidity ratio of 39.2 per cent further demonstrating the capacity of our strong balance sheet. Our non-performing loan ratio ended at 4.4 per cent. Furthermore, our coverage ratio remains robust at 140.7 per cent,” Mbulu said.

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LCCI advocates discipline, export to sustain Naira appreciation

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LCCI advocates discipline, export to sustain Naira appreciationThe Lagos Chamber of Commerce and Industry (LCCI) has emphasised the importance of maintaining discipline in the foreign exchange market to sustain the steady appreciation of the Naira.

The President and Chairman of the Council of LCCI, Mr Gabriel Idahosa, made the call in an interview with newsmen on Wednesday in Lagos.

Idahosa praised the efforts of the Central Bank of Nigeria in imposing discipline, attributing the recent Naira appreciation to curbing speculative activities.

“On the monetary side, the CBN is doing it. The primary efforts should continue to impose discipline in the foreign currency market.

“The abuses in the foreign currency market were prevalent and most of the fall in the value of the Naira in the last six months is not because there was any sudden calamity in the Nigerian economy.

“It was primarily because of very reckless speculations, that people were just speculating in the dollar, they had nothing to export, nothing to import, they were just buying the dollar for speculative reasons.

“And once the Central Bank started to impose discipline in the foreign currency market, we saw the value of the Naira rising very quickly by stopping speculation,” he said.

According to him, the strategies of the Central Bank, now, are designed to achieve a sustained discipline in the foreign currency market.

Idahosa highlighted the need to continue reducing the number of Bureau de Change operators, stressing that many operated without contributing to international trade.

He applauded the Central Bank’s move to enforce documentation and identification of buyers and sellers at BDCs, aiming to deter reckless speculation and curb illicit financial flows.

On the fiscal side, Idahosa urged President Bola Tinubu to prioritise a nationwide export drive, citing it as the key to bolstering the Naira and providing essential foreign exchange.

He emphasised the importance of fostering a culture of export among Nigerians across all scales of enterprise to reduce reliance on imports and strengthen the country’s economic resilience.

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Foreign reserves decline to $32.29bn

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The foreign reserve has depleted to $32.29 billion, which is a six-year low in the Central Bank’s course to save the naira.

This is the lowest level the reserves have been since September 25, 2017, when it was $32.28 billion.

The country’s foreign reserves declined by 6.2 percent, losing $2.6 billion since March 18, when the naira started its rebound from record-low levels against the dollar to $32.29 billion as of Monday, based on the latest available data from the CBN.

At the beginning of the month, the reserve was at $33.57 billion, then further dipped to $32.6 billion by April 12.

This comes as the CBN has attempted to save the naira through various interventions such as raising interest rates to 24.75 percent and managing foreign exchange trades.

It stepped up its intervention in the FX market with sales at both the official market and to BDC operators who sell dollars on the streets.

The apex bank, which sells $10,000 to each BDC every week, mandated them to only sell at a spread of 1.5 percent, which comes to N1,117 per US dollar.

The rate sold by the BDCs has set a defacto floor for the naira in the black market since the apex bank resumed sales to them in February.

Also, last month the CBN said it had cleared a backlog of $7 billion since the beginning of the year. That was built over the years as the central bank pegged its currency against the dollar, leading to a scarcity of foreign currency that deterred foreign portfolio investment. However, it’s unclear how much dollar debt the CBN retains on its books.

Akpan Ekpo, a professor of economics and public policy, said the CBN’s managed float system in which it is trying to ensure supply and curtail demand is not sustainable in the long term.

He said the CBN needs to be careful with how it depletes the foreign reserves as its main source is oil revenue.

“We need to manufacture non-oil goods and services, export them, and get foreign exchange and not depend on oil income,” he said.

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CBN expresses commitment to harnessing digital technologies

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The Central Bank of Nigeria says it is committed to harnessing the power of digital technologies to enhance financial inclusion.

CBN Governor, Mr Yemi Cardoso said this on Tuesday in Abuja, during a strategic institutions tour by participants of Senior Executive Course 46 of the National Institute of Policy and Strategic Studies (NIPSS).

Cardoso, who was represented by Dr Bala Bello, Deputy Governor, Corporate Services, said that digital technologies would also boost productivity and create an enabling environment for innovation and entrepreneurship to thrive.

According to him, the apex bank has already deployed robust digital technologies in driving most of its processes towards achieving optimal performance.

He said that NIPSS, as a foremost national policy think-tank, had made invaluable contributions to the socio-political and macroeconomic development of Nigeria.

“We are, therefore, not surprised at the apt and relevant choice of your research theme.

“The CBN and NIPSS have had a long-standing and robust working relationship since the establishment of the institute. This has culminated into positive mutual benefits for the two institutions.

“The CBN, on the one hand, has provided infrastructural support to the institute through construction of an auditorium and a hostel, in addition to the provision of technical support.

“On the other hand, NIPSS has supported the technical capacity of the CBN through the training of some personnel both at senior executive course level and intermediate course cadre,” he said.

The Director-General of NIPSS, Prof. Ayo Omotayo, said that the study visiting would be representing the institute in getting information from operators of the apex bank on the relevance of digital technology to developing jobs for Nigerian youths.

According to Omotayo, a lot of progress has been made globally in using digital systems to run the economy.

“The more of our activities that we can put in digital format, the more we get the opportunity of providing employment access to a whole lot of the 120 million active Nigerians.

“We at NIPSS always knock at the frontiers of knowledge, checking what is going to happen in the immediate future.

“We are working towards a system where we believe that almost every service can be delivered digitally,” he said.

The Acting Director, Monetary Policy Department of the CBN, Dr Lafi Bala Keffi, commended the NIPSS study group for its interest in the apex bank.

She urged the participants to explore the time-tested culture of NIPSS, which is to diagnose national, profer practical solutions and recommend ways of making such solutions realisable.

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