Union Bank of Nigeria announces its audited financial statements for the year ended 31st December 2018.
Following the successful execution of our debut local currency bond issue to raise N13.5bn and the tightening up of our loan portfolio, Union Bank is well positioned to continue executing key business priorities in 2019.
Group Financial Highlights:
o Profit Before Tax: up 33% to ₦18.5bn from ₦13.9bn as at December 2017
o Earnings: down 11% to ₦145bn from ₦168bn in 2017 due to 8% drop in loan book
o Net Revenue After Impairments: up 16% to ₦93.5bn compared to ₦80.64bn in 2017
o Non-Performing Loan Ratio (Bank): down to 8.1% from 20.8% as at December 2017
o Customer Deposits: up 7% to ₦857.6bn versus ₦802.4bn as at December 2017
o Operating Expenses: up from ₦66.7bn in 2017 to ₦75.0bn as at December 2018
Key Operational Highlights:
Product & Service Innovation
o Robotic Process Automation (RPA): Led the industry with the roll out of RPA technology to deliver efficiency on key backend operations such as ATM reconciliation.
o Enhanced Channels: Active users on our enhanced mobile banking platform is up 200%, contributing to a 101% increase in channel fees to ₦2.2bn from ₦1.1bn in 2017.
o Naira Letter of Credit: Launched a first of its kind local letter of credit to facilitate and expand domestic trade in Nigeria.
o Union360: Rolled out dedicated online banking platform to facilitate transaction banking for corporates and small businesses.
Brand & Citizenship
o Edu360: Union Bank hosted over 3000 attendees at its inaugural Edu360 education
festival. Edu360 is an annual event designed to foster collaboration and engagement
among all stakeholders on key issues affecting education.
o Enabling Success: Union Bank’s TV commercial themed Enabling Success is now
Nigeria’s most watched advert ever on YouTube and has garnered over 8 million
views across social media platforms. In the three months following the campaign,
brand survey results reflect a 30% improvement in the Bank’s net promoter scores
and 4.9% bump in our brand equity scores.
Awards & Recognition
o Excellence in Banking Innovation: 2018 New Age Banking Awards
o Best Company in Environmental Excellence and ‘Most Outstanding Company in
CSR/Sustainability: 2018 Sustainability, Enterprise and Responsibility Awards
(SERAs)
o 2018 Advertiser of the Year: Pitcher Awards
Speaking on the Group’s results for the year, the MD/CEO Emeka Emuwa said:
“Our priorities in 2018 were three pronged; enhancing our productivity across board;
tightening up our loan portfolio (especially resolving key large exposures which drove
NPLs up significantly at the end of 2017); and optimizing the Bank’s capital and
funding base.
I am pleased to report that we made significant strides in each focus area.
Notwithstanding a depressed economic environment and a challenging operating
landscape, our efforts to optimise productivity delivered results. Union Bank’s Group
Profit Before Tax (PBT) is up 33% to ₦18.5 billion in 2018 from ₦13.9 billion in 2017.
As consumer confidence in the brand continues to grow, customer deposits also
continue to grow, up 7.3% to ₦857.6 billion in 2018 from ₦802.4 billion in 2017. Our
Net Revenues After Impairments are also up 16% to ₦93.5bn compared to ₦80.6bn
in 2017 with significant contribution from growth in retail transaction volumes across
our channels.
Through an aggressive focus on recoveries and recognising fully provisioned loans
on our books, we successfully reduced the Bank’s NPL ratio, which is now down to
8.1% in 2018 from 20.8% at the end of 2017, in line with guidance provided at the
start of the year. In 2019, we will continue to maintain focus on recoveries while
prudently rebuilding our loan book and maintaining a conservative risk profile.
On the funding side, we successfully initiated the first tranche of our oversubscribed
local currency bond programme to raise ₦13.5 billion. We are encouraged by the
market and investor community response to the bond issue and subsequent listing on
the FMDQ platform as we continue our drive to optimize the Bank’s capital and
funding structure.
In 2019, we will double-down on our productivity efforts to deliver our financial targets.
We are harnessing synergies across our business segments to ensure we maximize
opportunities across entire value chains, while centralising key business and
operational functions for better efficiency, and prioritizing customer experience across
all our touchpoints.
We are also pleased to be introducing our women focused initiative, αlpHer, which
will provide a portfolio of financial and non-financial services to women across
customer segments in Nigeria.
Lastly, we have commenced the Long-Term Efficiency Acceleration Programme
(LEAP), a comprehensive transformation effort to embed cost discipline across the
Bank. We believe LEAP will deliver significant cost savings in 2019 and entrench a
culture of efficiency across all areas of the Bank.”
Chief Financial Officer, Joe Mbulu, commenting further on the 2018 results said:
“Gross revenues declined by 11% to ₦145.5 billion in 2018 from ₦163.8 billion in the
previous year as a direct consequence of the loan book clean-up and resolution of
key exposures.
Notwithstanding significant investments to execute our strategy including expanding
our agency banking footprint and aligning compensation with market for our entry to
mid-level employees (which increased operating expenses by 12% from ₦66.7bn in
2017 to ₦75.0bn as at December 2018), we are pleased that our core business
delivered a 33% growth to our topline PBT. Through LEAP, we will ensure that
operating expenses in 2019 remain within the Bank’s targets.
Our Return on Tangible Equity (ROTE) improved to 9.6% from 6.2% in 2017
demonstrating long-term shareholder value enhancement.
In addition to our successful fund raising activities during the year, we will further
support future growth and creation of high quality risk assets in 2019 through a Tier II
capital raise. This will boost our Capital Adequacy Ratio, which is currently at 16.4%
and remains above the regulatory limit.
About Union Bank of Nigeria, PLC.
Established in 1917 and listed on the Nigerian Stock Exchange in 1971, Union Bank is a household
name and one of Nigeria’s long-standing and most respected financial institutions. The Bank has a
network of over 300 Sales and Service Centers across Nigeria.
Following recapitalisation in 2012 from new investors and a new Executive Management team, Union
Bank has undergone an award winning transformation programme to re-stablish the bank as a leading
provider of financial services in Nigeria.
Union Bank is focused on Retail, Commercial and Corporate Banking businesses. In addition to
standard current and savings product portfolio, Union Bank has launched pioneering products into the
Nigerian retail market including UnionKorrect, UnionGoal and UnionBetta.
More information can be found at: www.unionbankng.com
