Banking

Q3-17: Union Bank Suffers Profit Loss Despite 16% Rise in Earnings

Published

7 years ago

31/10/2017

By Modupe Gbadeyanka

One of Nigeria’s long-standing and most respected financial institutions, Union Bank Plc yesterday announced its unaudited results for the nine months ended September 30, 2017.

However, the lender suffered a profit loss during the period, posting N12.4 billion profit after tax in the period under review compared with N13 billion in the same period of last year.

Also, its profit before tax went down by 2 percent to N13 billion from N13.3 billion a year ago, while the net Income is appreciated by 7 percent and the operating expenses increased by 10 percent.

In addition, the interest income rose by 22 percent to N88.5 billion from N72.3 billion in the first nine months of 2016). This was driven mostly by the 23 percent growth in average gross loans from N412 billion for 9M 2016 to N507 billion for 9M 2017.

Furthermore, the net interest income after impairment appreciated by 16 percent to N40.9 billion from N35.2 billion in 9M 2016.

Impairment went down by 53 percent to N6 billion from N12.9 billion recorded 12 months ago with the coverage ratio strengthened to 203 percent as at September 30, 2017, from 182 percent as at December 2016.

Non-interest revenue declined by 6 percent to N21 billion from N22.5 billion in 9M 2016; excluding nonrecurring Naira devaluation gain of N4.7 billion in 9M 2016, 9M 2017 improved by 18 percent.

Operating expenses went up by 10 percent at N49 billion from N44.6 billion in 9M 2016; with the increase driven largely by double-digit inflation amid continued capital investments in technology and Naira devaluation.

Also, the gross loans went down by 5 percent to N508.6 billion from N535.8 billion in Dec 2016, while customer deposits increased by 17 percent to N767.9 billion from N658.4 billion in December 2016).

These initiatives boosted its gross earnings, which went up by 16 percent to N109.5 billion N94.8 billion in 9M 2016).

According to the lender, this was driven by a customer-centric product suite, a revamped digital platform and the launch of a new advertising campaign, which delivered 63 percent YTD increase in new-to-bank customers in 2017.

Union Bank said it remains on course to deliver on its key objectives in 2017.

As previously announced, the bank’s plans to raise N50 billion in tier 1 capital through a rights issue formally opened on September 20 and closed on October 30.

The capital increase supports the Bank’s short to medium term growth objectives as it looks to re-position itself as one of Nigeria’s leading commercial banks. The new capital will also ensure the bank maintains a strong buffer above regulatory capital adequacy requirements.

Commenting on the results, the Chief Executive Officer (CEO) of Union Bank, Mr Emeka Emuwa, remarked that, “We remain encouraged by the results of our customer acquisition strategy, as customers continue to respond to our targeted market offerings and increased brand awareness, following the debut of a new advertising campaign to support the launch of Union Bank’s new digital platform, including our revamped mobile banking app and *826#, our SMS banking platform.

“Customer deposits are up 17 percent from December 2016 to close the period at N767.9 billion. Group Gross Earnings, at N109.5bn, reflect a 16 percent growth compared to the period ended September 30, 2016.

“However, a challenging macro-operating environment, characterised by double-digit inflation, continues to create headwinds for businesses, constrict consumer purchasing power and pressure operating expenses as well as portfolio quality.

“Consequently, core pre-tax earnings for the period were marginally lower at N13 billion compared to N13.3 billion in 9M 2016.

“With the N50 billion capital raise underway, we remain focused on our strategic priorities and expect this new capital to deliver the momentum needed to accelerate the pace of our business growth.”

Speaking further on the numbers, Chief Financial Officer of the bank, Oyinkan Adewale said, “The Group’s net interest income after impairments improved significantly by 16 percent from N35.2 billion to N40.9 billion compared to the period ended September 30, 2016.

“Non-interest income is down by 6 percent compared to 9M 2016, which included one-time revaluation gains.

“With our continued focus on early problem recognition and prudent provisioning, our coverage ratio has strengthened to 203 percent as at September 30, 2017, from 182 percent as at December 2016.

“The impact of Naira devaluation, coupled with the inflationary environment, has pressured our cost-to-income ratio, especially as we continue to make investments in technology critical to our long-term business strategy.

“We are confident that these investments will deliver the expected cost benefits in the medium term. We also expect improved capital adequacy and higher revenues, fuelled by N50 billion of new capital.

Banking

CBN Insists Old, New Naira Notes Remain Valid Beyond December 31

Published

14 hours ago

14/12/2024

Aduragbemi Omiyale

By Aduragbemi Omiyale

The Central Bank of Nigeria (CBN) has reaffirmed that the old and new Naira notes will continue to be used for financial transactions in the country beyond December 31, 2024.

There had been rumours that the old and redesigned N200, N500, and N1,000 banknotes would no longer be legal tender from Wednesday, January 1, 2025, because the central bank would phase out the notes in compliance with a Supreme Court judgement of November 29, 2023.

But the apex bank, in a statement signed by its acting Director of Corporate Communications, Mrs Hakama Ali, on Friday, clarified that the apex court’s judgement being cited did not authorise the bank to phase out the banknotes by the end of this year.

According to her, the court allowed the CBN to leave the old and new notes to be used concurrently until it decides to gradually phase out the former.

The central bank’s spokesperson urged members of the public to disregard claims suggesting the old series of these denominations would cease to be valid at the end of this year.

She urged them to continue to accept all Naira notes for daily transactions, encouraging banks to also adopt alternative payment methods such as electronic channels to reduce the pressure on physical cash usage.

“The Central Bank of Nigeria (CBN) has observed the misinformation regarding the validity of the old N1000, N500, and N200 banknotes currently in circulation.

“In line with the bank’s previous clarifications and to offer further assurance, the CBN wishes to reiterate that the subsisting Supreme Court ruling granted on November 29, 2023, permits the concurrent circulation of all versions of the N1000, N500, and N200 denominations of the Naira indefinitely.

“For the avoidance of doubt, all versions of the naira, including the old and new designs of N1000, N500, and N200 denominations, as well as the commemorative and previous designs of the N100 denomination, remain valid and continue to be legal tender without any deadlines,” the statement noted.

Banking

Access Bank to Acquire 100% Equity in South Africa’s Bidvest

Published

3 days ago

12/12/2024

Adedapo Adesanya

By Adedapo Adesanya

Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.

The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.

This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.

The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.

Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.

As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.

Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.

This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).

Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.

The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.

Banking

Access Bank Opens Branch in Malta to Strengthen Europe-Africa Trade Ties

Published

4 days ago

11/12/2024

Modupe Gbadeyanka

By Modupe Gbadeyanka

To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.

It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.

Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).

Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.

Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.

This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.

It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.

“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.

“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.

“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).

“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.

Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”