Financial Year 2018: Unity Bank posts earnings of N37.32bn, grows total assets by 50.8%

Unity Bank Plc on Friday released its result for the 2018 financial year which shows the Balance Sheet budding up with a whopping 50.8% growth during the year.

In its audited financial statements for the year ended December 31, 2018, released to The Nigerian Stock Exchange, the Bank’s Balance Sheet Size increased from N156.51billion in 2017 to N235.98 billion, culminating in Gross earnings of N37.33 billion for the year.

Similarly, in the period under review, the bank grew its bottom-line by 109.9% as Profit Before Tax (PBT) moved in a positive trajectory to close at N1.41 billion, with the Bank recording a Profit after Tax (PAT) of N1.27 billion, shaking off the negative position it posted in 2017FY. The year’s performance is supported by noticeable fundamentals derived from the Bank’s corporate action to clean up its book by eliminating all the legacy non-performing loans (NPLs) which resulted in full de-risking of its balance sheet and creating a new lease of life for the Bank

A cursory review of the Bank’s performance shows significant growth across key financial metrics, with Net Operating Income for the year ended December 31, 2018 growing by 112% to N21.63 billion from N10.22 billion in the corresponding period of 2017, Non-Interest Income also increased to N6.3billion from N1.61bn recorded in 2017 and earnings per share (EPS) for the year 2018 stood at 13.03 kobo, up from negative of 127kobo recorded in 2017 FY.

The Bank’s improved performance is attributable to the reinvigorated business transformation initiatives implemented during the year, in addition to strategic corporate actions taken by the Management of the Bank to prioritize customer service, product delivery as well as optimize its operations for operational efficiency, thus setting a stage for its sustainable business growth model.

The Bank’s strong performance feat was achieved through composite strategic focus involving the complete revamp of its service delivery channels, products revamp and profiling as well as building structured and secured operating environment to protect customers’ businesses. In this regard, the Bank, not only aggressively pushed out its USSD platform (the newly introduced customer-centric platform for easy banking), but also launched its youth-focused UniFi app – a robust omni-channel app that goes beyond banking services but also offers lifestyle services including gamification for increased customer satisfaction. These, along with aggressive transaction push led to a 290% increase in non-interest income (income from transactions, cards, mobile, ATMs, commissions & fees, FX etc.).

Furthermore, the Bank also optimized its operations and services through process simplification and automation while promoting cost efficiency across the entire value-chain. The Bank rolled out its Central Processing Centre (CPC) for standardized operations and operational risks mitigation thus improving service delivery to customers in the Bank. In effect, these and several modest initiatives led to the huge 17.3% reduction in total operating expenses and a major improvement in the efficiency ratios.

Unity Bank also leveraged on its core competence and strategic advantage in deepening its reach in Agribusiness and attendant value-chain, driving the over 360% growth in loan portfolio in this segment of the market. A major feat achieved without material increase in loan quality – with NPL ratio closing the year at 0.69% (the best in the industry).

On cost optimization, Unity Bank’s focus yielded positive results as the lender brought down its total operating expenses by 17.3% from N24.46billion in 2017 to N20.22billion in 2018FY. This reduction is primarily as a result of the Management drive to build strong processes in its operations by leveraging on key business alliances that attract better efficiency in resource allocation and growing scales in the network.

Commenting on the result, the MD/CEO, Mrs. Tomi Somefun said: “The most gratifying aspect of our 2018 performance, is that the Bank has made a dramatic turnaround from losses in the previous year to a promising profit position in 2018FY. This was made possible by growth in the business throughputs and transaction-based banking with its attendant strong non-interest income. We equally recorded significant growth in our customer acquisition through enhanced customer-centric products that we rolled out during the year riding on our rebranded channels and platforms which were well accepted by the youth. We leveraged on our exceptional competencies in agribusiness and rural economy niche market which contributed to substantial growth in loans through on-lending schemes to farmers in the last quarter of 2018, all of which buoyed our performance for the year under review”.

“Also, the two-prong customer-centric banking approach being deployed to deliver quality banking services to emerging sectors in Retail/Small and Medium Enterprises and the Agricultural value chain are impacting positively on the bank’s bottom-line. In furtherance of our vision to be the “Retail Bank of Choice,” the bank revamped its digital strategy to provide convenient, simple and efficient platforms that are already attracting the next generation of Nigerians and expand the volume of loyal customers that have kept faith with us through the years. These are designed to guarantee double digits growth in both earnings and profits for the bank in the near future” she stated.

The Bank is aggressively and creatively pushing the frontiers of its business by creating robust platforms to support emerging digitalization of strategic businesses as well as corporate service units aimed at unlocking inherent potentials that will enable the Bank effectively ride on economic headwinds and target opportunities in the markets.

Analysts are of the view that the full impact of the initiative on the account and shareholder’s value began to manifest at the fourth quarter of 2018 and early 2019, thereby gradually regaining investors’ confidence in the mid-tier lender after a period of uncertainty prevailed in the preceding year.

A statement from the Bank further adds that the Board of the bank expects that barring unforeseen circumstances, the trend of the results achieved in 2018 would be surpassed in 2019. With the margins steadily looking up, the outlook for the future holds even brighter prospects for the Bank even at this period that the Bank closes its recapitalization programme and sets a new phase of its strategic pursuit.

The Bank’s Board further expects that barring unforeseen circumstances, the trend of the results achieved in 2018 would be surpassed in 2019.

Other performance highlights include:
a. Strong increase in loan portfolio without compromising quality of assets:

* Gross loans increased from N9.47Bn in 2017 to N44.40Bn in 2018 (369%); with loan to deposit ratio at 18.4% thus creating more room to support customers business growth.

* Impairment losses declined from N44.25Bn in 2017 to N0.16Bn in 2018, while NPL ratio remains marginal at 0.69% (the best in the industry).

b. Significant operational efficiencies achieved, with whooping cost containment of N4.24Bn (17.3%) year-on-year.

c. Creating and leveraging on critical skills and capacities in Agribusiness and its entire value chain:

* Over N33Bn loans extended to farmers
* Leveraging on value-chain arising from financing activities

* National recognition for Unity Bank’s contribution to Agricultural development in Nigeria in 2018 with enduring awards from CBN and Federal Government

d. Major growth in channels adoption following a revamp of our platforms and product offering:

* Card issuance increased by 30% in 2018, while revenue increased by 74%

* POS penetration improved significantly, with 120% increase in number of terminals, a 362% increase in transaction count and a 19% increase in transactions value, with underlying revenue growing by 18% in 2018 over the previous year.