Unity Bank: Repositioned to grow profits, lending to real sector
By Kayode Tokede
Unity Bank Plc audited result and accounts for financial year ended December 31, 2019 showed impressive performance as the lender migrated from two years consecutive losses to positive performance. Despite the low yield environment, during the period, the Unity Bank was able to improve on its total operating income and reduced operating expenses to boost profitability.
After 2017 balance sheet clean up, the bank reported improved balance sheet growth with increases in lending to customers and improved deposit.
The first time in past five years, the bank declared gross earnings of N44.59billion and N293billion total assets, thereby consolidating on the gains on the reforms instituted by the Bank to grow a healthy balance sheet since the past two years.
The bank has improved on its lending to real sector with over N100billion granted as loans and advances to customers in 2019.
The solid financial performance for the period ended December 31, 2019 affirms Unity Bank as one of the leading banks in terms of resilience and a transformed bank amid challenging business environment in Nigeria.
The 2019 results revealed a number of positive performance as the management continued to reposition its stands on value creation for shareholders and improved on lending to real sector to support the federal government drive to revive the nation’s economy.
Reduction in OPEX, Increase in total operating income drive profits
Unity Bank for the period under review reported 28.7 per cent increase in gross earnings to N44.59billion in 2019 from N34.65billion reported in 2018.
The bank interest income also increased by 21.8 per cent to N35.95billion in 2019 from N29.5 billion in 2018, over increasing interest generated from loans and advances to customers that moved from N17.64billion in 2018 to N21.89billion reported in 2019. Also interest generated from placement from other banks moved from N361million in 2018 to N632million reported in 2019.
Also, interest expense grew by 25 per cent to N19.45billion in 2019 from N15.5billion reported in 2018, attributed higher bank charges that closed 2019 at N10.12billion in 2019 as against N7.7billion reported in 2018.
Continuing the trend during the year, Net interest Income was stronger in 2019, gaining 18.1per cent to N16.49billion in 2019 from N13.97billion in 2018.
In terms of fees generated from banking operations, the lender reported N4.98billio net fee and commission income in 2019 from N2.3billion reported in 2018, an increase of 11.3 per cent.
For the year under review, Unity Bank reported 31.5 per cent increase in total operating income to N25.13billion in 2019 from N19.11billion reported in 2018.
On the cost side, total Operating Expenses (Opex) dropped by 5.5 per cent to N19.6 billion, as against N20.7 billion in 2018, which is below average inflation rate within the period, a reflection of cost efficiency gains.
The Bank had embarked on several cost minimization initiatives that have continued to yield positive results as personal expenses dropped to N9.43billion in 2019 from N9.98billion reported in 2018 while other operating expenses moved to N8.37billion in 2019 from N9.35billion in 2018.
Notwithstanding the challenging business environment in Nigeria, the Bank’s Profit Before Tax was impressive at N3.64billion, compared to a loss of N7.55 billion reported in 2018 financial year.
Furthermore, the Profit After Tax closed positive in 2019, reporting N3.38billion in 2019 compared to a loss of N7.7billion reported in 2018.
Stronger assets amid CBN lending policy
Unity bank closed the year with 39 per cent increase in total assets to N293billion from N210billion in 2018 following a impressive performance in gross loans and advances to customers and customers deposits.
The Central Bank of Nigeria (CBN) had mandated commercial banks to lend 65 per cent of the deposit to support real sectors of the economy and Unity Bank last year did a loans of about N104billion, 136per cent increase over N44 billion reported in 2018.
Unity Bank’s Customers’ deposits also rose by 104per cent to N257.69billion in 2019 from N126.21 billion reported in 2018.
This reflected increased customer confidence, enhanced customer experience, early wins from the ongoing business transformation programme and the deepening of its retail banking franchise.
Market confidence in our repositioning efforts —CEO
The Managing Director/Chief Executive Officer of Unity Bank, Mrs. Tomi Somefun said that “the potential in many aspects of the business as reflected in growing balance sheet of the Bank is indicative of market confidence in our repositioning efforts.”
“It is also noteworthy that playing in the Agriculture sector as part of growth strategy and as bulwarks to drive value chain businesses in many segments of the retail market has continued to pay off. Looking ahead, we shall consolidate on the gains in the agribusiness, capitalizing on the growing profile in the sector, whilst also focusing on the youth market with increased investment in technology”, She further stated.
According to her, “the quest to deepen our retail play will go hand in hand with our focus on digital innovations. Already, we have deployed USSD banking, carried out augmentation of the platform to introduce local languages and further drive financial inclusion and had also launched omni-channel to cater for all segments of the banking public, especially the underbanked. In the coming years, the Bank will be opening more channels and bundled products bouquet for identified cluster initiatives and also leverage and expand relationships with other partners to drive more growth in earnings and profits.”
In addition, the Bank has concluded arrangements to launch a healthcare product called UnityCares to tap into credit support intervention scheme for the Health sector being rolled out by Central Bank of Nigeria as stimulus packages to support the indigenous pharmaceutical companies and healthcare practitioners that hope to build and expand capacity.
The new UnityCares product will thus cater to improve access to affordable credits by players, reduce medical tourism and conserve foreign exchange as well as provide long-term, low-cost finance for healthcare infrastructural development, healthcare product manufacturing, healthcare services and pharmaceutical/medical product distribution and logistics services.
Analysts are of the view that many things will continue to play in favour of the Bank.
Some of these include the sustained effort of the Bank in the area of Agribusiness, the increasing attention of Government and other Agencies in the agriculture sector and the growing interest of the youths in the agribusiness, among others.
