Emeka Emuwa, CEO, Union Bank

By Obinna Ezugwu

Hurray! Union Bank has revealed plans to surprise its shareholders with dividends for the year ended 2019. The bank made this revelation as it released its results on the floors of the Nigerian Stock Exchange last Friday.

In fact, shareholders of the bank are excited that after 10 years of diligent loyalty, the board of the financial institution which mantra used to be ‘Big, Strong, Reliable’, which has since changed to Simpler and Smarter, is giving them a bumper harvest this season.

Pushing against the weak economy and harsh macro-economic environment, Union bank has promised to pay a dividend of 25 kobo to its shareholders. Resulting from its determination to compete and showcase it strength, the bank pushed its profit before tax up by 33 per cent to ₦24.7 billion compared with ₦18.7 billion in the corresponding period of 2018.

It achieved earnings growth by 14 per cent to ₦159.9 billion against ₦140.1billion in 2018, driven by an increase in earning assets. At the end of its business year 2019, interest income also increased by 11per cent to ₦116.5billion against ₦104.8 billion in 2018.

The bank’s customer deposits rose by five per cent to ₦886.3 billion from ₦844.4 billion in December 2018.

Commenting on the results, the bank’s Chief Executive Officer, Mr.  Emeka  Emuwa,  explained that Union Bank UK divestment is expected to conclude in 2020 subject to regulatory approvals in Nigeria and the UK.

He said: “In 2020, we will continue to focus on bottom-line initiatives that will build on our success in 2019. We are promoting synergy across our businesses and functions to ensure alignment with and on our strategic objectives”.

“The Bank’s strong overall performance has paved the way for a critical milestone. With the approval of the Central Bank of Nigeria, the Board of Directors will recommend a dividend payment to shareholders for the first time in over a decade. Returning value to our shareholders has been at the core of Union Bank’s transformation and continuous drive to become a leading financial institution in Nigeria.

“The Bank delivered a solid set of results for full year (FY) 2019, recording growth across the major income lines. The top-line revenue at ₦159.9bn is up 14% from ₦140bn in 2018. Profit Before Tax (PBT) increased by 33% from ₦18.6bn in 2018 to ₦24.7bn for the year. Core to our earnings has been the conscientious growth of our loan book. The Bank booked ₦98bn in new loan assets in the course of the year reflecting a 20% growth to close at ₦595.3bn in Gross loans.

“As a result of our larger loan book and intensified recovery efforts, Non-Interest Income grew by 23% from ₦35.3bn to ₦43.3bn in the period with recoveries accounting for ₦8.8bn of the total amount. Consistent with our vision to be Nigeria’s ‘most reliable and trusted banking partner,’ we are optimizing our business model to focus solely on Nigeria where we continue to invest and thrive.

“Consequently, we have made the strategic decision to divest of our UK subsidiary, Union Bank UK which will enable us focus on the distinct long-term opportunities in the Nigerian market”.

Speaking on the FY 2019 numbers, Chief Financial Officer, Joe Mbulu said: “Our Group numbers reflect the classification of our UK subsidiary as a discontinued operation in line with IFRS 5. This is reflected in both 2018 and 2019 numbers. We are proud of the top-line and bottom-line numbers the Bank delivered in 2019, owing largely to operational efficiencies and a laser focus on key deliverables.

Through our LEAP initiative, our focus on discretionary cost discipline led to a reduction of N2.4 billion on related cost lines driving overall expenses down. Consequently, our Cost-Income Ratio declined to 74.1% from 79.2% in 2018. Our Total Customer Deposits grew by 5% to ₦886.3bn from ₦844.4bn as at December 2018 with low-cost deposits up by 7.7% and now accounting for 74% of total customer deposits compared to 71% in 2018.

“With our sustained and aggressive focus on recoveries to improve asset quality, we have brought the Bank’s NPL ratio down to 5.8% from 7.8% as at December 2018, in line with our 2019 guidance. Capital Adequacy Ratio (CAR) remains well above the regulatory threshold at 19.7%. We will leverage our improved risk asset and capital base as we continue to rebuild our loan portfolio which we expect to be a significant driver of growth in 2020.