BY EMEKA EJERE
The rumour making the rounds that Union Bank Plc may soon be acquired by either Zenith Bank Plc or Access Bank Plc may have been driven by everything but weak balance sheet.
While it is not unlikely that such scheming may be seriously going on outside the views of the discerning public, the first quarter result of Union Bank is not anywhere below industry expectation.
The lender last week disclosed that its profit before tax (PBT) rose by 12 per cent to N6.9bn as of the end of the first quarter of 2021 from N6.2bn in the corresponding period of 2020.
A statement titled ‘Group unaudited financial statements for the quarter ended March 31, 2021’ on Thursday said that was driven by higher non-interest income and lower operating expenses.
Highlights of the statement said its gross earnings was down by 15 per cent to N36.4bn in the period under review from N42.6bn in Q1, 2020, due to lower interest environment in the Nigeria financial sector.
The statement said net operating income after impairments was relatively flat at N24.3bn in Q1, 2021 from N24.2bn in Q1 2020; while non-interest income rose by 10 per cent to N14.1bn from N12.9bn in Q1 2020, driven by successful debt recovery efforts.
Union Bank said its operating expenses fell by four per cent to N17.3bn from N18bn in Q1, 2020, an outcome of sustained cost optimisation efforts; while non-performing loans ratio was flat at four per cent.
Commenting on the results, the Chief Executive Officer, EmekaOkonkwo, said, “I am pleased to be able to provide the first set of quarterly results under my tenure as CEO following a smooth transition in leadership.
“Despite the challenging economic climate, our bank has maintained a steady performance that we can build on for the rest of the year.
“The bank has responded well to the challenges in the market since the onset of the pandemic. Our overall efforts in Q1 delivered a 12 per cent growth in PBT.
“We are particularly pleased with the consistent growth we are seeing in transaction volumes which validates our digital-led strategy and is delivering returns. By prioritisingpersonalised solutions and enabling self-service, we are attracting transaction-backed deposits and enhancing customer knowledge to better manage risk.”
He said its performance was also supported by strong debt recovery efforts which contributed to growth in non-interest income, enabling it to maintain net operating income at N24.3bn despite the significant reductions on net interest margins across the industry since Q1 2020.
The tier 1 bank held its 52thAnnual General Meeting (AGM) where its shareholders approved the Group’s 2020 annual accounts presented by the Board Chair, Mrs. Beatrice HamzaBassey.
The shareholders whose attendance at the AGM was by proxy, owing to public health safety directives on public and mass gatherings due to the sustained COVID-19 threat, approved the recommended dividend of 25 Kobo per 50 Kobo ordinary share, while applauding the bank’s resilience in these times, and its focus on sustaining shareholder value.
In her remarks, Mrs. HamzaBassey highlighted key achievements of the Bank in 2020 including the continued focus on digital innovation for high-quality service delivery across touch points; the bank’s multipronged approach to supporting the fight against COVID-19, and the prompt pivot to remote work for over 70% of employees at the height of the pandemic, owing to strategic investments in digital technologies prior to the pandemic.
She said:“Our commitment to delivering high quality earnings remains unwavering. I am pleased to announce that the Bank delivered a resilient set of results in 2020 notwithstanding the challenging macroeconomic operating environment.
“Our overall performance demonstrates our resilience and ability to adapt to the constantly changing business environment to maximise shareholder returns. We remain committed to delivering value to our shareholders as we continue to drive growth and proﬁtability of our business.”
Major highlights of the Bank’s financial performance in 2020 show that profit before tax grew by 2.8% to ₦25.4 billion, from ₦24.7 billion in 2019. Customer deposits also increased by 27.6% to ₦1,131.1 billion compared to ₦886.3 billion in 2019, reflecting the Bank’s agility in delivering a compelling range of products to its customers during the pandemic, and increased adoption of digital channels. In addition, Non-performing loans ratio reduced to 4% from 5.8% in 2019, driven by a disciplined recoveries strategy, a more robust loan book and key restructurings to support customers during the pandemic.
Commenting on the bank’s performance for 2020 and plans for 2021, the Chief Executive Officer, Mr. EmekaOkonkwo said:
“In 2020, despite the headwinds caused by the pandemic, Union Bank continued to deliver a strong performance that has enabled the Board of Directors propose a dividend payment for the second consecutive year. This indicates resilience and affirms the strong foundation that was rebuilt over the past eight years.
“As we begin a new chapter, we will continue the journey to becoming a leading financial institution in Nigeria. Sustaining value to our shareholders remains at the core of our continuous drive and we remain committed to delivering improved profitability and higher returns in 2021 and beyond.”