Union Bank has released its audited financial statements for the year ended 31st December 2020. The Bank’s results for the period show sustained growth in key income lines and significantly improved fundamentals notwithstanding a constrained operating environment largely due to the impact of the Covid-19 pandemic.
Union Bank’s investments in technology and building a progressive work culture over the past eight years enabled a swift response to the pandemic that allowed our workforce to transition to remote working while maintaining the productivity required to deliver this strong set of results in 2020.
Bank Financial Highlights:
- Profit earlier than tax: up 2.Eight% to N25.4bn (N24.7bn in FY 2019).
- Profit After-tax: up 1.2% to N24.7bn (N24.4bn in FY 2019).
- Gross earnings: down 1.9% to N156.9bn (N159.9bn in FY 2019).
- Net working income after impairments: up 8.Three% to N103.4bn (N95.5bn in FY 2019).
- Net interest income earlier than impairment: up 10.1% to N56.9bn (N51.7bn in FY 2019) because of decreased hobby costs.
- Non-interest income: up 1.6% to N44bn (N43.3bn in 2019) driven by way of boom in internet buying and selling earnings in addition to revaluation profits.
- Operating expenses: up 10% to N78bn (N70.8bn in FY 2019) because of an growth in regulatory and technology expenses.
- Gross loans: up 23.Eight% to N736.7bn (N595.3bn in FY 2019) pushed via targeted lending to key sectors of the economy.
- Customer deposits: up 27.6% to N1,131.1bn (N886.3bn in FY 2019) reflecting our agility in turning in a compelling range of products to our clients at some stage in the pandemic and multiplied adoption of our virtual channels.
- Non-acting loans ratio: down to 4% from 5.8% (FY 2019) pushed by using a disciplined recoveries method (N7.2bn in 2020), a more robust mortgage ebook and key restructurings to guide clients at some stage in the pandemic.
Key Operational Highlights:
Channels: Active customers on our virtual structures grew 1.3x. During the 12 months, we added new capabilities which include give up-to-quit account establishing and enhanced card offerings such as domestic shipping of cards boosting revenues from digital channels by way of 1.5x.
Agent Network Expansion: We expanded our UnionDirect network to over 18,000, representing a 6x growth. Transaction extent and cost grew 10x and 12x respectively turning in 14x revenue boom.
Enhanced Retail and Digital Offerings: We relaunched UnionVibe, UnionLegend and UnionInfinity, a collection of products focused on the key teenagers and teenager demographic; and distributed over N9.4bn loans with new credit propositions.
Systems Upgrade – We upgraded our core systems to guide our boom aspirations even as strengthening the performance, reliability, protection and
processing capacity of our systems. With this improve, we're now in a position to process at least 10x the quantity of transactions for 2020.
Funding: We secured both local and foreign currency funding to help increase across our precedence areas. Union Bank raised:
―₦35bn business paper issuance. The a hundred and eighty and 270-day notes have been oversubscribed, reaffirming market self assurance in our brand
―$200m 10-year funding from U.S International Development Finance Corporation (DFC)
―$75m Pandemic Trade Mitigation investment from Afrexim
―$30m working capital funding from IFC
―Employees: The Bank become the first inside the enterprise to enforce far flung working for its personnel in March 2020. With over 70% of our group of workers operating remotely at the peak of the pandemic, we added resources to maintain and enhance the bodily and intellectual health of our colleagues.
―Customers: We deepened our engagement via digital structures and bolstered our channels to enable self-provider. Supported by way of the Central Bank, we also offered restructuring of mortgage terms for organizations suffering from the outbreak of Covid-19 in key sectors of the financial system. At our branches, heightened hygiene & social distancing guidelines were put in vicinity.
―Community: We donated over ₦350m toward the fight against Covid-19. These covered donations to the Private Sector Coalition in opposition to Covid-19 (CACOVID); 54gene to help testing and research, operating with the Nigeria Centre for Disease Control (NCDC); and the Lagos State COVID-19 Emergency Food Response programme to assist families laid low with the pandemic.
―Business continuity: Operationally, the financial institution tailored as lockdowns and movement restrictions developed at some stage in the year. We designed a operating version that ensured operational performance even as maintaining ok contingencies that assured business continuity should newly become aware of operational risks crystallize.
―Managing liquidity and credit score dangers: We targeted on elevating long term liabilities in local and overseas currencies. We additionally deepened our recognition on vital sectors all through the pandemic and stronger portfolio range. With the continued review of our credit score portfolio and strain checking out, we focused on
COVID-19 Response: The impact of COVID-19 in 2020 cannot be understated. In reaction, the Bank constituted a CEO-led task pressure in February and adopted a proactive approach to make certain the health and safety of key stakeholders and to mitigate the poor impact on our enterprise.
UBUK Update: In January 2020, Union Bank announced its divestment from its UK subsidiary to awareness solely on Nigeria and the awesome long-time period possibilities that the market affords. In Q4 2020, we acquired a “no-objection” clearance by using the Central Bank of Nigeria and the divestment is ongoing.
Dividend Payment: For the second yr going for walks, the Bank is providing a dividend charge and returning value to shareholders. Union Bank’s capacity to deliver a robust overall performance within the face of an economically debilitating pandemic speaks to the resilience and lengthy-term basics of the Bank. Subject to shareholders’ approval, a dividend of 25 kobo in step with 50 kobo share is being proposed.
Management Update: In December 2020, the Bank’s Chief Executive Officer, Emeka Emuwa introduced his retirement powerful March 31, 2021. Following a a success search system, the Board has appointed Emeka Okonkwo, an Executive Director presently leading the Bank’s Corporate Banking commercial enterprise, to succeed him. Emeka Emuwa served as CEO for 8 years and led the Bank’s transformation and repositioning as a key player in the Nigerian financial area. Promoting asset nice with strong risk control systems whilst leveraging CBN’s forbearance possibilities.
Brand & Citizenship: Through our projects, we impacted over three million human beings in 2020. We persisted our aid for the schooling zone impacting teachers, students and parents, through our Edu360 platform; deepened our investments in ladies/female empowerment projects thru vocational, digital and leadership training; persevered our social innovation force, and supported community improvement via the “gift of water” and supply of meals to the underprivileged.
Key partnerships in this vicinity in 2020 encompass MamaMoni, Pearls Africa, Awarri, LEAP Africa, Cece Yara Foundation, Junior Achievement Nigeria, GiveFood.Ng Initiative, and so forth.
Commenting on the consequences, Emeka Emuwa, CEO stated:
“The Bank has added a strong set of results notwithstanding the impact of COVID-19 on our operations and the broader economy, allowing the Board of Directors to preserve to return price to shareholders with a proposed dividend charge for the second one 12 months in a row. This demonstrates the strong foundations we have built, as we retain to supply towards our target of becoming a main economic institution in Nigeria.
For the overall 12 months, we grew throughout key earnings lines. Net income after impairments grew 8.3% from ₦95.5bn to ₦103.4bn and translated into 2.8% boom in Profit Before Tax to ₦25.4bn from ₦24.7bn.
The center of this overall performance is driven by using the boom in our mortgage book, with a 23.Eight% increase in gross loans, to ₦736.7bn from ₦595.3bn in 2019.
The pandemic improved tendencies in client behaviour and we have visible a rapid boom in virtual adoption with a 38% YOY boom in active users on our UnionMobile channel with overall energetic customers now at 2.9 million. Our UnionOne and Union360 platforms for companies grew via eleven% from 25,000 customers to 27,700 customers. 94% of transactions inside the Bank at the moment are performed digitally, up from 89% in 2019.
We also aggressively grew UnionDirect (our agent community) by 6x from three,a hundred to 18,100 consistent with our focus on our retail enterprise. With our investments yielding fine consequences, we're nicely-located as a sturdy leader within the retail and digital area.
In 2021, the Bank will attention on improving sales and shareholder value by using revving up patron acquisition, engagement and transactions via seamless patron journeys and an optimized provider shipping platform.
As I retire following eight years of rebuilding and repositioning this storied organization, I am convinced that with the outstanding control team and a clear strategy in area, Union Bank is nicely-positioned to keep to compete and supply price to its shareholders.
Speaking on the FY 2020 numbers, Chief Financial Officer, Joe Mbulu stated:
“We are thrilled with both our top and bottom-line overall performance in 2020, in light of the effect of the pandemic and monetary challenges. Significant inflationary pressures and the interpretation of forex depreciation drove boom in our cost base, however, we maintained sturdy manage, proscribing working rate increase to ten% (₦seventy seven.9bn from ₦70.8bn), properly under the charge of inflation. Consequently, we noticed a marginal growth in our cost to profits ratio to seventy five.4% from 74.1%.
Our patron deposits hit a milestone at some point of the yr, crossing the ₦1tr mark to ₦1,131.1bn from ₦886.3bn in FY 2019, an boom of 27.1%. Low-cost deposits have been up by 17%, constituting 68% of total deposits supporting to push the cost of finances down by 1.Four%.
We continued to proactively manage our growing danger asset portfolio and recorded better asset excellent, with our NPL ratio enhancing from 5.8% to four.0%. This fulfillment, blended with solid capital adequacy at 17.Five% and persisted pinnacle-line growth, affords the platform for robust increase going forward.
We will keep growing our mortgage portfolio in 2021, which we anticipate to be a great motive force of growth, mixed with our price chain synergies throughout our enterprise so as to power consumer and transaction boom in the course of the yr and past.
Our UBUK subsidiary stays categorized as “Available for Sale” because the sale method keeps albeit not on time because of the pandemic-precipitated lockdowns”
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