Banking

Union Bank Records N18bn Profit as NPL Ratio Drops to 8.7%

Published

6 years ago

03/04/2019

Dipo Olowookere

By Dipo Olowookere

On Tuesday, Union Bank of Nigeria announced its audited financial statements for the year ended December 31, 2018.

In the results, the lender grew its profit before tax by 33 percent to N18.5 billion from N13.9 billion, while the profit after tax went up by 39 percent to N18.1 billion from N13 billion.

However, the gross earnings during the year went down by 11 percent to N145 billion from N168 billion in 2017.

Union Bank has continued to position itself to continue executing key business priorities in 2019 especially with the successful execution of its debut local currency bond issue to raise N13.5 billion and the tightening up of its loan portfolio.

It was observed that the decline in the revenue in the year was as a result of the 8 percent drop in the bank’s loan book as the NPL ratio reduced to 8.7 percent from 19.8 percent.

A further analysis of the results showed that the net revenue after impairments moved up by 16 percent to N93.5 billion compared with N80.64 billion in 2017, while customer deposits rose to N857.6 billion from N802.4 billion, with the operating expenses increasing from N66.7 billion in 2017 to N75.0 billion.

Commenting on the results, the MD/CEO of Union Bank, Mr Emeka Emuwa, said, “Our priorities in 2018 were three pronged; enhancing our productivity across board; tightening up our loan portfolio (especially resolving key large exposures which drove NPLs up significantly at the end of 2017); and optimizing the bank’s capital and funding base.

“I am pleased to report that we made significant strides in each focus area. Notwithstanding a depressed economic environment and a challenging operating landscape, our efforts to optimise productivity delivered results.

“Union Bank’s Group Profit Before Tax (PBT) is up 33% to N18.5 billion in 2018 from N13.9 billion in 2017. As consumer confidence in the brand continues to grow, customer deposits also continue to grow, up 7.3% to N857.6 billion in 2018 from N802.4 billion in 2017.

“Our Net Revenues After Impairments are also up 16% to N93.5 billion compared with N80.6 billion in 2017 with significant contribution from growth in retail transaction volumes across our channels.

“Through an aggressive focus on recoveries and recognising fully provisioned loans on our books, we successfully reduced the bank’s NPL ratio, which is now down to 8.1% in 2018 from 20.8 percent at the end of 2017, in line with guidance provided at the start of the year.

“In 2019, we will continue to maintain focus on recoveries while prudently rebuilding our loan book and maintaining a conservative risk profile.

“On the funding side, we successfully initiated the first tranche of our oversubscribed local currency bond programme to raise N13.5 billion.

“We are encouraged by the market and investor community response to the bond issue and subsequent listing on the FMDQ platform as we continue our drive to optimize the bank’s capital and funding structure.

“In 2019, we will double-down on our productivity efforts to deliver our financial targets. We are harnessing synergies across our business segments to ensure we maximize opportunities across entire value chains, while centralising key business and operational functions for better efficiency, and prioritizing customer experience across all our touch points.

“We are also pleased to be introducing our women focused initiative, αlpHer, which will provide a portfolio of financial and non-financial services to women across customer segments in Nigeria.

“Lastly, we have commenced the Long-Term Efficiency Acceleration Programme (LEAP), a comprehensive transformation effort to embed cost discipline across the bank.

“We believe LEAP will deliver significant cost savings in 2019 and entrench a culture of efficiency across all areas of the bank.”

Also commenting, the Chief Financial Officer, Mr Joe Mbulu, said, “Gross revenues declined by 11% to N145.5 billion in 2018 from N163.8 billion in the previous year as a direct consequence of the loan book clean-up and resolution of key exposures.

“Notwithstanding significant investments to execute our strategy including expanding our agency banking footprint and aligning compensation with market for our entry to mid-level employees (which increased operating expenses by 12% from N66.7 billion in 2017 to N75.0 billion as at December 2018), we are pleased that our core business delivered a 33% growth to our topline PBT. Through LEAP, we will ensure that operating expenses in 2019 remain within the bank’s targets.

“Our Return on Tangible Equity (ROTE) improved to 9.6% from 6.2% in 2017 demonstrating long-term shareholder value enhancement.

“In addition to our successful fund raising activities during the year, we will further support future growth and creation of high quality risk assets in 2019 through a Tier II capital raise.

“This will boost our Capital Adequacy Ratio, which is currently at 16.4% and remains above the regulatory limit.”

Banking

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

Published

10 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

2 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.”