Nigeria’s retail lender, Unity Bank plc has reported an unprecedented surge in net trading income from N7 million to N630 million in the first quarter of 2023, the highest in five years.
Net trading income refers to the profit or revenue generated by a financial institution from its trading activities, after deducting any related expenses or losses.
Findings showed the bank’s growth in net trading income can be primarily attributed to foreign exchange revaluation.
During the first quarter of 2023, Unity Bank’s net trading income soared to an impressive N630.1 million compared to N7.19 million recorded in the same quarter of the previous year.
Analysts said this significant increase reflects the bank’s strong trading performance and highlights its expertise in managing foreign exchange risks.
In addition to the exceptional growth in net trading income, Unity Bank also experienced significant growth in other operating income. This category witnessed an increase of 159 percent, reaching N406.7 million in the first quarter of 2023 compared to N156.9 million in the corresponding period of 2022.
The growth in other operating income can be attributed to transactional income, which amounted to N401.5 million, and treasury-related income, which totalled N5.2 million.
Unity Bank also experienced growth in interest income, benefiting from successive increases in interest rates implemented by the Central Bank.
During the period under review, the bank’s interest income increased by 8 percent to N12.9 billion compared to N11.9 billion recorded in the corresponding period of 2022.
The growth in interest income was primarily driven by an increase in loans and advances to customers, which amounted to N10.58 billion, and financial investments with amortized costs, totalling N1.99 billion.
Furthermore, fees and commission income witnessed substantial growth, rising by 34 percent to N2 billion in the period under review compared to N1.5 billion in the same period of the previous year.
This growth was primarily driven by e-banking income, reflecting the bank’s efforts in leveraging digital platforms to enhance its service offerings and generate additional revenue streams.
In contrast, operating expenses saw a 14 percent increase to N7.42 billion in the quarter under review compared to N6.53 billion recorded in the same quarter of 2022.
The bank’s profit after tax amounted to N1.1 billion in the first three months of 2023, reflecting a 21 percent increase from N869 billion recorded in the same quarter of the previous year.
Total liabilities and equity for the quarter under review stood at N440.4 billion.
Cash generated from operations showed a loss of N14.75 billion in the first three months of 2023, in contrast to a gain of N16.84 billion recorded in the same quarter of 2022.
Net cash flows from investing activities in the first quarter of 2023 experienced a decline of 89.7 percent, amounting to N2.25 billion compared to N21.97 billion recorded in the same period of 2022.
Net cash flows from financing activities increased to N39.9 billion in the first quarter of 2023, compared to a loss recorded in the same quarter of 2022, which amounted to N2.09 billion. This increase was primarily driven by proceeds from loans and borrowings, totalling N40 billion.
At the end of the period, cash and cash equivalents stood at N101.27 billion, representing a decrease of 21.49 percent from N129 billion recorded in the same period of 2022.