In spite of eight percent growth in gross earnings, Union Bank Plc, recorded 19.3 per cent fall in its profitability to N20.5 billion in the financial year ended December 2021 from N25.4 billion in 2020.
This led to general decline in the bank’s performance ratio namely Return on Equity which fell to 7.7% in 2021 from 10.3% from 2020; Return on Assets also fell to 0.9% in 2021 from 1.3% in 2020 while Earnings per share dropped to 66k in 2021 from 84k in 2020. Similarly, Net Interest Margin fell to 3.0% in 2021 from 4.5% in 2020.
Union Bank however said that it achieved 33 percent increase in income from fee and commission income as well as 26 percent increase in e-business income during the year.
The Tier-2 bank disclosed this in its audited financial statement for the year released to investors on the Nigerian Exchange Limited, NGX.
The decline in profitability follows a 3.6% fall in Net operating income after impairments to N99.7 billion from N103.4 billion in 2020.
According to Union bank, gross earnings rose by 8.9% growth to N175 billion in 2021 from Non-interest income rose 26.7% to N55.7 billion from N44 billion in 2020.
Other performance indicators show that operating expenses marginally grew by 1.5% to N79.1 billion from N78.0 billion in 2020, reflecting tight cost control despite inflationary pressures.
During the year, Union Bank recorded 22% increase in gross loans to N899.1 billion from N736.7 billion in December 2020 while customer depositsgrew by 20.4% to N1.4 trillion from N1.1 trillion in December 2020
Providing insights into the bank’s performance in 2021, Chief Executive officer, Union Bank, Emeka Okonkwo, said, “Following an enhancement to our operating and go-to-market model to deliver better performance and efficiency leveraging our network across the regions, we are increasing our customer engagement and product penetration which is translating into higher customer revenues across geographies.
“On the back of this, the Bank has continued to record headline growth by diversifying our income streams and accelerating our recoveries programme. For the full year, our gross earnings grew by 8.9% from N161bn to N175bn, while our net operating income after impairments dropped by 3.6% to N99.7bn from N103.4bn. Interest income grew by 1% as our earnings asset base expanded with a growing loan book.”
The Union bank boss further stated that, “We continued our strong growth in non-interest income through a combination of aggressive recoveries, which grew 119% in the period, from N7.2bn to N15.9bn and further growth in fee and commission income (33%) and e-business (26%). These were delivered on the back of sustained multi-channel growth in users, volume and value across our digital and agent channels.
“Total active UnionMobile users now stands at 3.3 million, up 20% while our Union360 customer base grew by 22% to 26,400.
On the Union Bank’s performance in 2022, Okonkwo said, “In 2022 the bank will continue to focus on broadening and deepening the strong foundations we have built, while enhancing our digital delivery platforms and service propositions to customers.
“We remain deeply thankful to our erstwhile core investors, Union Global Partners and Atlas Mara who have been instrumental to our journey since 2012. Their invaluable support and expertise helped steer the Bank through turbulent waters and into an era of growth and stability.
“As we turn a new chapter for our Bank with a new core investor expected to come on board, we are proud of the solid foundation built over the last ten years and look forward to a seamless transition and continued successes in the future.”
DIVESTMENT BY CORE INVESTORS
In December 2021, Union Bank’s core investors – Union Global Partners Limited and Atlas Mara – notified the Board of Directors of a Share Sale and Purchase Agreement (SSPA) reached with Titan Trust Bank (“TTB”) for the proposed sale of 89.39% of Union Bank’s issued share capital. The agreement comes a decade after the initial investment by the core investors in 2012 and will effectively transfer majority ownership of the Bank to TTB. The transaction is in the process of final regulatory approvals. Consequently, the transaction also triggers the hive-out of Union Bank UK (“UBUK”) which was approved by shareholders in an Extra-Ordinary General Meeting on 29th March 2022. This allows the Bank transition from an international to a national focus, facilitating a more flexible and efficient deployment of capital towards strategic opportunities identified within sectors of the Nigerian economy.