Unity Bank plc, a Nigerian mid-tier lender, showed improved profitability for the first time in four years after its post-tax profit almost doubled in the first six months of 2019.
The tier-two bank grew its profit after tax by 96 percent in the first half of this year to N967 million as against N492 million in the same period of 2018, while it grew its total assets by 13 percent to N267 billion as of the end-June 2019.
As a result, the bank’s return on assets, a profitability metric that measures how profitable a firm is relative to its total assets, rose to 0.36 percent from 0.21 percent after recording sustained decline in the previous three years.
“This performance is supported by the bank’s effort to improve asset utilization which reduced the need for asset acquisition,” the bank stated. “Thus, translating to lower depreciation and amortisation expenses.”
Besides this, the Bank also said it increased its focus on its Agribusiness through its partnership with the Central Bank of Nigeria (CBN).
Unity Bank’s total operating income fell 4 percent to N10.69 billion from N11.15 billion. However, total-operating expenses dipped 12 percent to N9.15 billion from N10.39 billion, thereby providing a soft landing for pre-tax profit, which surged 96 percent to N1.05 billion from N535 million.
A further review of the bank’s performance also shows significant improvements across key financial metrics such as the earnings assets and gross loans. The bank recorded a quantum leap in its earning assets by 62 percent thus leading to higher income and grew its gross loans by 456 percent.
This increase was also boosted by an increase in investment securities, particularly holdings of Treasury Bills and Bonds, leading to a 23 percent growth in interest income.
Similarly, in the period under review, gross earnings grew by 17 percent, while operating expenses reduced by 20 percent. Earnings per share improved by 66 percent to 17.99 kobo for the period ended June 30, 2019, compared to 10.86 kobo in the same period a year earlier.
“Further strategic initiatives adopted by the bank include the implementation of various staff optimization strategies which led to a marginal decline of 6 percent in personnel costs,” it stated. “Staff allocation was also bettered streamlined to leverage capacity for improved productivity.”
Commenting on the result, Tomi Somefun, managing director/CEO, said the performance showed the bank had started to reap from its multiple streams of income, which, according to her, include asset creation, investments and trade activities amongst others.
“The bank is increasing focus on its areas of strength – Agribusiness and retail, its automation of more processes to cut off wasteful expenditure,” Somefun said. “The constant improvement of service delivery through the use of internally developed solutions saved the bank huge sums in cost.”
