Unity Bank adds value to shareholders wealth with profit growth

Unity Bank Nigeria Plc has added shareholder value as the lender’s half year profit rose 11.12 percent amid tough macro conditions in Africa’s largest economy.

The middle tier bank said in a statement its gross earnings rose to N33.56 billion in the year to end-June against N30.85 billion last year.

Profit was N7.89 billion in 2015 compared with N7.10 billion the same period of the corresponding year (HY) 2014.

The impressive results means investors appetite for Unity Bank’s share will spike given their desire for a high returns on their investment.

The growth in Unity Banks profit can be attributed to 916 percent surge in foreign exchange revaluation reserve to N1.23 billion the period under review from N1.23 billion and a 94.38 increase in other operating income.

Analysts say with this earnings report, it means Unity Bank is successfully operating amid the harsh operating environment and regulatory headwinds.

The CBN applied rules and restrictions to stabilise the naira after it declined to a record low in February as the price of oil, the nation’s major foreign-exchange earner fell by a half in the second half of last year.

The Central Bank governor has held on to the interest rate at 13 percent in order to curb inflation that has risen to a record 9.2 percent as consumer wallets get squeezed on the back of rising transportation costs.

Gross income grew by 8.78 percent to N33.56 billion in the period under review as against N30.85 billion.

Unity Bank’s cost to income ratio remained flattish at 23.72 percent as the Asset Management Corporation of Nigeria (AMCON) charge and cost of running diesel to power plant at the office continues to spiral operating expenses.

Operating expenses were up 9.51percent to N15.08 billion in 2015 as against N13.77 billion in 2014. Net margin, a measure of profitability and efficiency was also flattish at 23.72 percent.

The bank is aggressive about lending while creating risk assets as loans to deposit ratio increased to 83.84 percent in 2015 as against 79.02 percent the preceding year.

Loans to customers were up by 7.09 percent to N234.90 billion in 2015 as against N219.17 billion in 2014. Deposits from customer were up 1.13 percent to N280.17 billion in 2015 compared with N277.02 billion the preceding year.

Unity Bank’s total assets increased by 3.90 percent to N429.66 billion in 2015 compared with N413.30 billion in 2014.

The bank’s share price closed at N2.28 on the floor of the exchange while market capitalization was N26.65 billion.

BALA AUGIE