Unity Bank’s earnings spike amid macro-economic challenges

Unity Bank plc has meandered the macro-economic challenges bedevilling Nigerian lenders as it recorded a 36.52 percent increase in after tax profit, analysis of the lender’s financial statement shows.

For the first three months through March 2015, the bank’s profit after tax (PAT) increased by 35.62 percent to N3.62 billion from N2.67 billion the same period of the corresponding year (Q1) 2014.

The growth in profit was driven by a 47.62 percent increase in fee and commission income, 416.97 percent increase in foreign exchange income, and a 456.30 percent increase in other operating income.

However, interest and similar income dropped by 9.85 percent to N4.30 billion in 2015 from N4.77 billion in 2014, while net interest income reduced by 7.36 percent to N7.96 billion.

Analysts say the Nigerian lender may have had interest income dip as a result of the Central Bank Nigeria tightening stance that made interest income from T-bills dropped significantly.

Also, interest income from loans and advances may have grown at a slow space, which explains the reduction in net interest income.

Despite the hike in interest rate by the apex bank, Unity Bank’s interest expense reduced by 7.36 percent to N7.38 billion in 2015 compared with N7.96 billion as of March 2014.

The reduction in net interest expense and increase in other operating income boosted top-line as its gross earnings increased by 10.28 percent to N16.51 billion in 2015 from N14.97 billion in 2014.

Operating expenses were up by 14.52 percent to N7.65 billion in 2015, as against N6.68 billion in 2014 as tough operating environment characterised by regulatory induced costs continues to bleed profit.

Loans and advances to customers increased by a mere 1 percent to N237.12 billion in 2015, as against N235.48 billion in 2014, while deposits from customers reduced by 3.50 percent to N267.50 billion.

 

BALA AUGIE