Union Bank to Grow Retail Customer Base Despite N5.9tr Legal Battle

By Dipo Olowookere

Tier-2 lender, Union Bank of Nigeria, has expressed its desire to focus more on improving its retail customer base as it forges ahead in the year.

Managing Director of the financial institution, Mr Emeka Emuwa, while speaking at the firm’s 49th Annual General Meeting (AGM) at the International Conference Centre (ICC), Abuja on Tuesday, disclosed that Union Bank was now in pole position to execute its growth agenda from 2018 onwards.

According to him, “Strengthening our capital base through the Rights Issue was key for the bank in 2017.

“Notwithstanding the challenges a tightened economy presented, the rights issue was 20 percent oversubscribed.”

He attributed this overwhelming success to “strong shareholder and investor confidence in Union Bank’s immediate and longer-term plans.”

The bank chief said, “With sufficient capital buffers, we are now in pole position to execute our growth agenda from 2018 onwards.”

“Operationally, we continued to focus on growing our retail customer base and optimising customer experience with simpler, smarter banking solutions,” he added.

“We launched an upgraded suite of digital channels including UnionMobile, UnionOnline and our unique USSD banking code *826#, driving an increase in active subscribers above 100 percent on the mobile app and online banking platforms.

“Union Bank’s alternative banking platform remains the fastest growing in the industry. We continue to attract broad segments of new customers, adding 90 percent more new-to bank customers in 2017 compared to 2016,” Mr Emuwa said further.

A breakdown of Union Bank’s results for the 2017 financial year showed that the lender reported a profit before tax (PBT) of N15.5 billion and a profit after tax of N14.6 billion.

The bank also achieved gross earnings of N163.8 billion with the operating expenses increasing to N65.1 billion from N62 billion in 2016 due to inflationary pressures and the impact of devaluation on technology and network investments.

Furthermore, interest income grew by 25 percent to N124.5 billion from N99.7 billion in 2016, as a result of the impact of Naira devaluation on the foreign currency denominated loan book, government securities yields and loan book repricing.

Non-interest revenue also moved up by 31 percent to N39.3 billon from N29.9 billion in 2016, driven by improved fee and commission income, trading income and a more effective debt recovery machine.

In addition, gross loans grew by five percent to N560.7 billion compared with N535.8 billion in 2016, while customer deposits rose by 22 percent to N802.4 billion from N658.4 billion in 2016, continuing its upward trajectory since 2016.

The growth was led by investments in customer-led products, recently upgraded alternate channels, along with a strengthened brand.

Union Bank’s annual report showed that the bank has a non-performing loan ratio of 19.78 percent of a total N517.1 billion at the end of the financial year under review.

Meanwhile, Chairman of Union Bank, Mr Cyril Odu, who presented the financial institution’s report to shareholders, said the lender was involved in 850 litigation cases with the amount claimed to total N220.26 billion.

However, he added that the total amount claimed in cases instituted by Union Bank in court amounted to N77.17 billion.

According to him, “A total provision of N2.98 billion has been made based on the advice of professional legal counsel.”

In its financial statements, Union Bank said, “There are three cases with total claim of N5.921 trillion of which judgement was awarded against the Bank in conjunction with other parties and provisions were not recognised in the financial statements.

“Management is of the view that a high level of success is expected at the Court of Appeal based on professional legal advice and that the likelihood of outflow of economic resource is considered remote.

“The Directors are of the opinion that none of the aforementioned cases is likely to have a material adverse effect on the Bank and are not aware of any other pending or threatened claims and litigations besides those included in the above number.”

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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