Intercity Bank, First Interstate Bank, Tropical Commercial Bank, Pacific Bank Limited, Centre Point Bank, Societe Bancaire, NNB International Bank, Bank of the North, and New Africa Bank; these are all the banks that merged for Unity bank to be birthed.
Since its emergence in 2006, a series of events has left the bank facing challenges such as low-yield assets, high cost of funds and high operating expenses, cumulating in fewer dividends to investors.
In the first half of 2022, the bank made a profit of N1.69 billion and reported an accumulated loss brought forward amounting to N371.7 billion, which resulted in negative retained earnings of N370.04 billion.
When a company records a profit or loss, the amount, less any dividends paid to shareholders, is recorded in retained earnings, which is an equity account.
Unity Bank has been posting profits since 2018 but has not declared dividends for years, due to the losses it has accumulated and is still redeeming.
The bank also reported negative shareholder’s equity on the back of its depleted retained earnings which slowed to N274.1 billion in the first half of 2022 from N-281.9 billion in the first half of 2021.
A negative shareholder equity balance implies that a company has incurred losses of such size that they completely offset the combined amount of any payments made to the company for its stock by investors, and any accumulated earnings from prior periods.
The bank’s cash position, however, declined, as a net decrease in cash and cash equivalent of N1.5 billion was reported in June 2022 from N105.9 billion reported in January 2022.
Its total cash and cash equivalent at the end of the period (H1) amounted to N103.7 billion, down 30 percent year on year from N149.1 billion in the first half of 2021.
Further analysis of its cash flow statement shows that the cash generated from the bank’s operations was negative, amounting to N6.95 billion in the first half of 2022. However, during the period, on the back of interest received which amounted to N23.9 billion, the bank’s net cash generated from operations amounted to N2.9 billion.
Its net cash from investing activities totaled N1.86 billion in the first half of 2022, primarily driven by the cash inflows from investing activities during the period.
The bank’s investing activities during the period include; the purchase of property and equipment (N1.35 billion), the purchase of intangible assets (N5.5 million), and the acquisition of investment securities at FVOCI (N29.4 billion).
Its net cash flow from financing activities was negative (N6.3 billion), primarily due to the repayment of borrowings which amounted to N7.9 billion in the first half of 2022.
Unity Bank generated interest income totaling N23.9 billion in the first half of 2022, a 17.9 percent increase from N20.27 billion reported in the first half of 2021.
The growth in interest income was driven by the 26.5 percent increase in the interest income generated from its loans to customers which amounted to N19.17 billion during the period.
On account of the monetary policy rate hike by the Central Bank of Nigeria, interest income generated from investment securities at amortised costs also grew by 11.86 percent to N3.96 billion in the first half of 2022, from N3.54 billion in the corresponding period of 2021.
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Fee and commission income improved by 4.23 percent to N3.2 billion in the first half of 2022 from N3.07 billion in the first half of 2021.
Thereby bringing gross earnings to a total of N27.6 billion in the first half of 2022, representing a 17 percent growth from N23.6 billion in the first half of 2021.
Commenting on the financial statements, Tomi Somefun, managing director/CEO of Unity Bank Plc, said the outlook for our financial position has now moderated significantly looking at other fees and income lines whose performance was hitherto characterised by volatilities in the operating environment.
“As the Bank aims to further grow all indices to double-digit regions in the coming years, one reassuring take from the financial position lies in the market confidence, as well as steadily growing retail and SME franchise arising from the development of products that resonate with different markets segments, which will enable the Bank to continue to operate and successfully navigate the tough operating environment, amid rising economic headwinds,” Somefun stated.
Unity Bank’s profit as a percentage of its total gross earnings during the period improved to 6.12 percent from 5.85 percent in the first half of 2022 in the first half of 2021.
Profit grew by 22.46 percent to N1.69 billion in the first six months of 2022 compared to N1.38 billion in the first six months of 2021.
Total assets improved by 4 percent to N574 billion in the first half of 2022 as against N547 billion in the first half of 2021.
Unity Bank’s total loans and advances to customers increased to N303.6 billion in the first half of 2022 from N246.9 billion in the first half of 2021.
Deposits from customers reported by the bank grew by 12.78 percent to N359.5 billion in the first half of 2022 from N318.8 billion in the first half of 2021.
Further analysis of the type of accounts shows that the deposits from customers were mostly from deposits made to demand accounts which amounted to N136.49 billion, followed by savings accounts (N90.4 billion), time deposits accounts (N90.28 billion), and domiciliary accounts (N42.3 billion).
Unity Bank reported annualized earnings per share of N14.53 per share.
In its recently released earnings forecast on the Nigerian Exchange Group (NGX), the bank’s gross earnings for the fourth quarter ( Q4) of 2022 are projected to decline to N12 billion, and profit to decline to N297.5 million.
Impairment for credit loss is forecasted by the bank to amount to N1.56 billion in the fourth quarter of 2022.
