Following a N50 billion rights issue in 2017 to support its growth strategy, Union Bank closed the year with a Capital Adequacy Ratio of 17.8 percent, according to the Chief Executive Officer, Emeka Emuwa who announced on Tuesday, plans to increase investments in agriculture, manufacturing and services.
The bank which reported a profit before tax (PBT) of N15.5 billion notwithstanding the operating environment also plans to grow loan book by lending to real sectors and continue to drive retail lending.
Speaking at the bank’s 49th Annual General Meeting which held in Abuja, Emuwa said the rights issue closed at 120 percent subscription, signaling investor confidence and raising the bank’s capacity to position for increased productivity and profitability.
“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% oversubscribed. This overwhelming success is credited to strong shareholder and investor confidence in Union Bank’s immediate and longer-term plans. With sufficient capital
buffers, we are now in pole position to execute our growth agenda from 2018 onwards.
He said operationally, the bank continued to focus on growing retail customer base and optimising customer experience with simpler, smarter banking solutions.
“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% 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% more new-to bank customers in 2017 compared to 2016.”
He said notwithstanding a fiercely competitive environment and reduced consumer purchasing power in the system, the new-to bank customers and deepening share of wallet with existing customers have driven customer deposits up by 22 percent to ₦802 billion.
“For 2018, our focus is on leveraging our capital and investments in talent and technology to accelerate growth across all business segments and improve enterprise value for all our stakeholders,” he stated.
However, with a Non-Performing Loans (NPLs) standing at 19.78 percent, the bank could not declare any dividends in adherence to recent directive of the Central Bank of Nigeria (CBN).
Presenting the Group’s report to shareholders, Chairman of the Bank, Cyril Odu announced gross earnings of ₦163.8 billion for the financial year ended December 31, 2017.
Other highlights of the bank’s financial performance in 2017 show that interest income grew by 25 percent to ₦124.5 billion from ₦99.7 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 re-pricing. Non-interest revenue also moved up by 31
percent to ₦39.3 billon from ₦29.9 billion in 2016, driven by improved fee and commission income, trading income and a more effective debt recovery machine.
He said operating expenses increased by 5 percent to ₦65.1 billion from ₦62.0 billion in 2016 due to inflationary pressures and the impact of devaluation on technology and network investments.
Gross loans grew by 5 percent to ₦560.7 billion compared to ₦535.8 billion in 2016, while customer deposits rose by 22 percent to ₦802.4 billion (from ₦658.4 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.
Presenting Key Operational Highlights of the bank, Odu mentioned also a 90 percent increase in new-to-bank accounts as against 2016, driving customer deposits up by 22 percent, newly launched suite of digital channels drove active subscriber numbers up by over 100 percent across channels and also launched the award-winning “Uncle Thomas” campaign to support launch of digital platforms and the brand.
Onyinye Nwachukwu, Abuja
