• Thursday, March 28, 2024
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Union Bank shareholders endorse N54.4 billion balance sheet reduction

Union Bank H1’20 earnings hit N79.7bn as non-internet income jump 22%

In a bid to restructure the lender’s balance sheet for efficiency, Union Bank Plc’s shareholders unanimously approved the proposed reduction of N54.4 billion from the bank’s share premium account. The shareholders endorsed the move at an Extra-Ordinary General Meeting (EGM) in Lagos.

Share premium represents the difference between the issue price of a stock and the par value of that stock. Share premium account houses the non-distributable reserves of a company and can be used to write off equity-related expenses and used to issue bonus shares.

Losses incurred from legacy transactions have hindered shareholders of the bank from getting dividends. The N54.458 billion deficit revealed in the bank’s financial position for the 2018 financial year is an addition to the sum of N247.8billion approved by shareholders in 2017.The new current capital reduction move by the bank will eliminate the major impediment which had been preventing the bank from paying dividends to its shareholders.

Despite 39percent surge in its net profit in 2018, Union Bank could not declare dividends because of the extant laws barring companies with negative retained earnings from declaring dividends.

According to directors of the bank, the transaction which is subject to confirmation by the Federal High Court, would have no impact on the bank’s creditors or its shareholders’ funds but instead, is expected to pave the way for the payment of dividends to shareholders.

Cyril Odu, chairman Union Bank said the bank is focus on the delivering of value to its stakeholders.

“As we continue our push towards being Nigeria’s most reliable and trusted banking partner, we remain focused on improving the profitability of our business and delivering value to all our stakeholders – shareholders, customers, business partners and employees,” he said.

In its first quarter result for the period ended 31 March 2019, Gross Earnings tanked 5percent to ₦37.7bn compared to ₦39.5bn in Q1 2018 driven by a lower loan book base and declining yields in the current interest rate environment. Profit Before Tax remain flat at ₦5.4bn, Non-Interest Income surged 39percent to ₦10.8bn as against ₦7.8bn in Q1 2018 an outcome of the bank’s ongoing debt recovery efforts , improved fees and commission income and dividends from investments.

Shares of Union Bank traded at N7.00 on the floor of the Nigerian Stock Exchange on Tuesday with one year return up 14.75percent.

 

OLUFIKAYO OWOEYE