Unity Bank Plc staged a major recovery in the immediate past business year as the commercial bank moved from a net loss of N14.92 billion in 2017 to a net profit of N1.27 billion.
Key extracts of the audited report and accounts of the bank for the year ended December 31, 2018 showed pre-tax profit of N1.41 billion in 2018, as against pre-tax loss of N14.24 billion. Gross earnings however dropped from N89.93 billion in 2017 to N37.33 billion in 2018. Earnings per share recovered from net loss of 126.62 kobo in 2017 to 13.03 kobo in 2018.
Directors of the bank stated that they have reached advanced stages in ongoing efforts to raise new equity and debt capital to bolster the balance sheet, which had been significantly impaired by a major non-performing loan resolution.
Reassuring on the outlook for the bank, the board noted that additional equity and debt capital will improve the capital ratios of the bank as well as competiveness and its expansion plans.
The bank stated that whilst the capital raising exercise has been diversified to engage several strategic investors, deliberate actions were taken to strictly extract commitment following the review of capacity, investment funding availability and strong poise and strategic alignment to the long-term vision and aspirations of the bank that form the basis to invest in it.
“In the ongoing capital raising exercise, the bank has considered a variety of classes of investors, including local and foreign, internal and new investors, individual and institutional investors, amongst other options. However, all prospective investors are required to demonstrate financial and business capacity, impeccable reputation and potential to add strategic value towards achieving the bank’s strategic goals and vision,” the report stated.
According to the bank, the strategic disposal of non-performing loans under a toxic asset resolution initiative in the ongoing capitalisation process resulted in the reported negative shareholders’ funds of N242.193 billion in 2017 and also impacted on the reported negative shareholders’ funds of N243.69 billion in 2018.
“Management is committed to and highly optimistic of a successful conclusion of the capitalization activity,” the report stated.
In a one-off total de-risking of its balance sheet, the bank had in 2017 wrote off a total of N16 billion that arose from goodwill from legacy merger issues, a decision that negatively impacted the bottom-line and led to a net loss of N14.2 billion in 2017.
The courageous action taken by the bank towards cleaning up the observed issues thus resulted in a negative capital base but also gave birth to a leaner bank with a healthy balance sheet.
“By this milestone, the bank now carries zero non-performing loan and is in full compliance with regulatory criteria. Furthermore, with a fully performing loan portfolio and improved risk processes, the financial risk on the bank from credit exposures have been extremely minimised,” the report stated.
The bank had indicated that it had taken a number of strategic initiatives among which include; a revised market focus that has, and will continue to increase agriculture and agro-allied financing, youth and digital banking and women financing; enhanced retain banking drive and cost containment among others.
