• Monday, May 27, 2024
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Unity Bank’s Q3 net income surges 856.83%on reduced costs


Unity Bank plc, a Nigerian lender, is in growth spurt as third quarter 2014 net income surges 856.83 percent buoyed by reduced operating costs, analysis of the financial statement shows.

The impressive results are coming amid tough regulatory environment caused by central bank’s tightening policy and regulatory induced costs such as the Asset Management Corporation of Nigeria (AMCON) charge.

For the year first nine months through September 2014, the bank’s profit after tax (PAT) spiked by 856.83 percent to N11.05 billion, from N1.15 billion the same period of the corresponding year (Q3) 2013.

The growth at the bottomline was driven by a 22.10 percent reduction in total operating expenses to N20.86 billion, as against N26.79 the preceding year.

Management efficient uses of resources to generate increased profit are evidenced by its net margin that jumped to 22.95 percent in 2014, compared with 2.53 percent  last year.

Additionally, the manifestation of its cost reduction mechanism reflected on its cost to income ratio that reduced to   63.44 percent in the review period from 95.67 percent the preceding year.

It would be recalled that the apex bank made it mandatory on all Nigerian lenders to pay 0.5 percent to their total assets as AMCON charge, a policy analysts say is piling costs on lenders and also bleeding their profits.

The bank is also aggressive about lending as loans to deposits ratio  jumped to 76.41 percent in 2014, compared with 64.31 percent last year. 

Furthermore, loans and advances were up by 10.18 percent to N215.11 billion in Q3 2014, compared with  N195.23 billion the same period of Q3 2013.

Deposits by customers also increased by 7.71 percent to N281.52 billion in Q3 2014, as against N303.27 billion as of Q3 2013.

In order to accelerate expansion and increase the market price of share of shareholders, the Nigerian lender, last year, approved a right offer of N40 billion.

Reasons given by the bank for the right issues includes branch expansion, investing in human capital, and the development of Information Technology.

The bank’s third quarter growth was further driven by a 22.24 percent increase in interest and similar income and a 23.7 percent spike in net interest income culminating in a 6.05 percent increase in gross earnings to N48.14 billion in 2014, from N45.39 billion  the preceding year, despite CBN tightening stance.

Unity Bank is ranked ninth in the banking industry based on spread with 238 branches nationwide.

Between 2006 to date, Unity Bank grew its deposit base by 297 percent. The bank also grew its deposit by 17 percent between Dec. 2012 and June 2013.

Shareholder’ fund surged by 103.45 percent to N57.40 billion in Q3 2014 compared to N28.21 billion as at Q3 2013.

The bank came into existence as a result of the re-capitalisation policy of the CBN in 2005, which saw nine banks come together to form synergy. 

Unity Bank’s share price closed N0.50 on the floor of the NSE, while market capitalisation was N19.22 billion.