Union Bank grows gross earnings to N175b – Union Bank of Nigeria (UBN) Plc recorded modest growth in the top-line in 2021, showing steady revenue growth and strong business momentum driven by non-interest income.
Key extracts of the audited report and accounts of UBN for the year ended December 31, 2021 released yesterday at the Nigerian Exchange (NGX) showed that the bank continued grow its top-line despite macroeconomic headwinds.
Gross earnings rose by 8.9 per cent to N175 billion in 2021 as against N160.7 billion recorded in 2020. The top-line growth was driven by strong non-interest income, which rose by 26.7 per cent from N44 billion in 2020 to N55.7 billion in 2021. The growth in non-interest income was also driven by significant increases in debt recoveries. Net operating income after impairments slipped by 3.6 per cent to N99.7 billion as against N103.4 billion. Profit before tax followed the downtrend with a drop of 19.3 per cent from N25.4 billion in 2020 to N20.5 billion in 2021.
Further analysis showed that operating expenses grew marginally by 1.5 per cent to N79.1 billion in 2021 as against N78 billion in 2020, reflecting tight cost control despite inflationary pressures. Gross loans rose by 22 per cent to N899.1 billion in 2021 as against N736.7 billion in 2020, underlining the expansion of lending to key economic sectors of opportunity. Customer deposits also grew by 20.4 per cent from N1.1 trillion to N1.4 trillion, reflecting the improvement in the bank’s product base and digital channels.
Chief Executive Officer, Union Bank of Nigeria (UBN) Plc, Emeka Okonkwo said the bank has sustained steady performance as a result of increased customer engagement from an enhanced operating and go-to-market model and gains derived from its digital penetration strategy.
According to him, following an enhancement to its operating and go-to-market model to deliver better performance and efficiency leveraging network across the regions, the bank is increasing its customer engagement and product penetration which is translating into higher customer revenues across geographies.
He said the bank has continued to record headline growth by diversifying its income streams and accelerating its recoveries programme.
He outlined that the bank continued its strong growth in non-interest income through a combination of aggressive recoveries, which grew 119 per cent in the period, from N7.2 billion to N15.9 billion and further growth in fee and commission income by 33 per cent and e-business by 26 per cent.
He noted that the growths were delivered on the back of sustained multi-channel growth in users, volume and value across the bank’s digital and agent channels. Total active UnionMobile users now stands at 3.3 million, up 20 per cent while Union360 customer base grew by 22 per cent to 26,400.
“In 2022, the bank will continue to focus on broadening and deepening the strong foundations we have built, while enhancing our digital delivery platforms and service propositions to customers. We remain deeply thankful to our erstwhile core investors, Union Global Partners and Atlas Mara who have been instrumental to our journey since 2012. Their invaluable support and expertise helped steer the Bank through turbulent waters and into an era of growth and stability.
“As we turn a new chapter for our Bank with a new core investor expected to come on board, we are proud of the solid foundation built over the last ten years and look forward to a seamless transition and continued successes in the future, “ Okonkwo said.
Management report indicated that active users across mobile and digital platforms grew by 23 per cent as the bank delivered a range of upgrades across its channels including account opening and account blocking as well as features like QR payments and HMO payments.
In retail and digital offerings the bank’s expanded retail and digital portfolio enabled growth across its business segments with the retail deposit and loan books growing by 10 per cent respectively while SME loan book grew by 233 per cent, a trend expected to continue across all business segments.
“We introduced new group loans and asset financing solutions for small businesses making it easier for collectives to access credit and simplified loan products and payment solutions for retail customers.
“ We launched the ‘’Save & Win Palli Promo,” a nationwide campaign to generate low cost deposits while rewarding new and existing customers for higher savings as well as deposits in current accounts. The success of the promo was key to the 20 per cent incremental growth in customer deposits in 2021.
“Agent banking network, we grew UnionDirect, our agent banking network, by 123 per cent to nearly 32,000 agents delivering transaction volumes and value increases of 170 per cent and 142 per cent respectively as we continue to push the expansion of our retail business across the regions.
“Our focus on exploring new frontiers in the digital space contributed to growth in our digital revenue from N6.9 billion to N7.4 billion. In 2021, we made strides in creating new revenue streams and scaling digital payments, platforms, and partnerships,” Okonkwo said.
He added that as part of the bank’s drive towards self-service and customer empowerment leveraging technology, it debuted its investment app M36 on the market giving customers the ability to invest in various instruments via the self-service platform. The bank expects to significantly scale access and investment options available on the app in a second phase of the launch in 2022.
He pointed out that with the growth in the global gig economy and COVID-19 significantly disrupting mode of work, especially for millennials, the bank introduced Kula, a platform that connects Nigerian freelancers with employers requiring short-term resources while Union Bank acts as a payment gateway. A full launch of Kula is expected this quarter.
“In 2021, we continued to expand the scope of our CSI initiatives, successfully impacting more than one million people nationwide, while deepening our focus on diversity and inclusion.
“Union Bank remains committed to supporting our communities, impacting more than 250,000 people through projects and initiatives in education, healthcare and welfare working with partners including Lagos Food Bank and FoodClique. As part of an industry response to the #EndSars riots, Union Bank donated N1.1 billion to the Nigeria Police Force to support the Police Equipment Fund.
“More than 4,500 students were impacted through our Financial Literacy Day and World Savings Day activities. We also empowered 40 social innovators in partnership with LEAP Africa and trained 40 students on robotics and Artificial Intelligence in collaboration with our partner, Awarri.
“Over half of our branches across the network now employ clean energy technology, relying on solar power to run the branches and ATMs. The bank continued to demonstrate our support for the United Nations Sustainable Development Goals (SDGs), marking World Environment Day, World Water Day and Employee Volunteer (EV) Day with projects impacting over 300,000 people.
“As a bank that is deeply committed to the empowerment of women and girls, we continuously implement business practices and initiatives that promote gender equality. Presently, women make up about 40 per cent of total employees and about 53 per cent of our training spend in 2021 went to deepening the capacity of female employees,” Okonkwo said.
He noted that the acquisition of the majority equity stake of 89.39 per cent in the bank by Titan Trust Bank (TTB) is in the process of final regulatory approvals.
Last December, Union Bank’s core investors – Union Global Partners Limited and Atlas Mara – had notified the board of directors of a Share Sale and Purchase Agreement (SSPA) reached with TTB for the proposed sale of 89.39 per cent of Union Bank’s issued share capital. The agreement comes a decade after the initial investment by the core investors in 2012 and will effectively transfer majority ownership of the Bank to TTB.
Consequently, the transaction also triggers the hive-out of Union Bank UK (UBUK) which was approved by shareholders in an extra-ordinary general meeting on March 29, 2022. This allows the bank transition from an international to a national focus, facilitating a more flexible and efficient deployment of capital towards strategic opportunities identified within sectors of the economy.
Chief Financial Officer, Union Bank of Nigeria (UBN) Plc, Joe Mbulu said the bank maintained very strong cost controls during the year despite the inflationary pressures and the translation effect of currency depreciation on its cost base.
“Operating expenses increased marginally by 1.5 per cent with increasing regulatory, depreciation and amortisation costs. Customer deposits grew by 20 per cent while our loan book grew by 22 per cent from N736.7 billion to N899.1 billion, as we deepened support for key sectors in the economy.
“We have been remained proactive in the way we manage our growing risk assets, maintaining our asset quality during the year with our non-performing loan (NPL) ratio growing marginally from four per cent to 4.3 per cent,” Mbulu said.