Unity Bank: Reaping the Fruits of Repositioning

Unity Bank Plc last week became the first company to announce its results for the third quarter ended 2014 and recorded a 900% growth in profit.  Goddy Egene writes that result shows that the bank has begun to reap from repositioning

Further indications that efforts to reposition Unity Bank Plc for better results  have started yielding  results  emerged last week  as the bank became the first to announce its third quarter(Q3)  results ended September 30, 2014.
Many listed companies are expected to announce their results as the Q3 ended last week. But Unity Bank  Plc maintained the record it set  during  the 2014 half year results  season by being the  first to declare its performance. The Q3 results  is a consolidation on the H1 performance.

While the bank recorded a growth of 92 per cent in profit after tax (PAT) in H1, Unity Bank’s PAT for Q3 jumped by   900 per cent.

Corporate profile

Unity Bank emerged from the largest merger and consolidation in Nigeria's banking industry. Following the banking consolidation spearheaded by the Central Bank of Nigeria (CBN), nine financial institutions with competences in investment banking, corporate and retail banking came together in January 2006 to form Unity Bank Plc.

The legacy banks include: Intercity Bank Plc, First Interstate  Bank Plc, Tropical Commercial Bank Plc, Pacific Bank  Limited, Centre Point Bank  Plc, SocieteBancaire Limited, NNB International  Bank Plc, Bank of the North  Limited  and New Africa Bank Plc.  Unity Bank has  over 79,000 shareholders comprising of individuals, associations, business institutions within the  country and State Governments.  It has 236 business offices spread across the country and  is  continuously increasing this number.

The bank has  the  vision to  be Nigeria's retail bank of choice, while its mission to  create superior wealth for its stakeholders.  Unity Bank’s core values include: Teamwork, Passion, Resourcefulness, Integrity, Dependability, Empathy and Excellence.

The board of directors of Unity Bank is led by Mr. LamisDikko, who is chairman while Thomas Etuh is vice chairman.  It has  four executive directors namely: Ahmed Yusuf( retail banking); Aisha Azumi Abraham(secretariat and Services/company secretary);Abubakar Abba Bello(corporate and commercial banking); DahiruChadi (enterprise management); 'AreseAlonge(risk institutional management).  Other non-executive directors include: Oluwafunsho Obasanjo; Mr. Hakeem Shagaya; AlhajiAminuBabangida and Mr. GboyegaAsabia; Alhaji M. A. Kaugama;  andOluseunMabogunje

The turning point

The impressive growth being witnessed in the financial performance of Unity Bank Plc resulted from the efforts of board and new management appointed late last year.

Specifically, the foundation for the impressive financial performance of Unity Bank was laid when the new management led by Semenitari was appointed. While Semenitari was appointed the MD\CEO, Bello and  Alonge were   made  EDs.

The impressive performance of the bank since the new management took over  did not, however, come as a surprise to many industry watchers given the pedigree and experiences of the MD, new EDs and  the entire executive management of the bank.

Semenitari holds a Bachelor of Science Degree in Chemical Engineering from the University of Lagos and a Master in Business Administration (MBA) from International Graduate School of Management, University of Navara (I.E.S.E) Barcelona, Spain. He is an alumnus of the Harvard Business School, Advance Management Programme (AMP173) in Boston, United States of America. He is also an alumnus of Cambridge Judge Business School, Advanced Leadership Programme (ALP 1), Cambridge University, Cambridge, UK.

He has over 22 years’ banking experience in operations, internal control, branch management, credit and marketing, commercial and retail banking, consumer, corporate banking (energy) among  acquired in banks such as Zenith, Diamond, United Bank for Africa, ACB International Bank and Continental Trust Bank and First City Monument Bank (FCMB).

On his part, Bello had his early education at Capital School, Kaduna and King’s College Lagos. He obtained B.Sc Accounting, Ahmadu Bello University, Zaria in 1989 and is currently pursuing MBA (University of Liverpool). He has 23 years cognate experience in banking with numerous Nigerian banks rising  to be the MD/CEO of United Bank for Africa, Zambia.

  Similarly, Alonge had her high school education at Queens College, Lagos and obtained her BA. in 1988 from the University of Benin. She further obtained an MA in 1998 from the University of Lagos and is an MBA holder from Lagos Business School (2003). Before her new appointment Alongeserveds as Group Head of Financial Institutions Team at Access Bank Plc. She also served as Deputy General Manager and Group Head of Treasury Marketing Group  at the same bank. She started her career in London Borough of Islington before joining  GTBank Plc. She later moved to Access Bank.

Nine months’ performance

Unity Bank ended the Q3 with gross earnings of N48.14 billion, compared with N45.39 billion recorded in the corresponding period of 2013.  Net interest income grew from N20.8 billion to N25.69 billion, while total operating income rose from N28.5 billion to N35 billion.  Continued efforts to tackle operating expenses led to higher bottom line. The bank reduced its total operating expenses by 22 per cent from N26.7 billion to N20.8 billion.

Consequently, profit before tax rose by 900 per cent from N1.204 billion to N12 billion, while PAT rose by the same margin from N1.15 billion to N11 billion. Total assets improved from N401 billion to N407 billion, while earnings per share soared from 4.4 kobo to 28.7 kobo. Analysts believe with the Q3 EPS, shareholders should expect dividend at the end of the year.

Need for improved deposits

Although the performance of Unity Bank has witnessed significant improvement since the new management took over, the decline in customers deposits is an indication that  more efforts should be geared towards that direction. The bank’s deposits fell by seven per cent to N281.519 billion in Q3 compared to a decline of two per cent in HI.

Commenting on the HI results, analysts at Meristem Securities Limited had said Unity Bank would need to employ some aggressive tactics to attract deposits that will allow them to grow risk assets substantially.

“Deposits declined by two  per cent in the period to N298 billion(N303 billion in 2013) which is slightly worrying given the increase in the bank’s loan to deposit ratio to 69 per cent (not too far below the statutory limit of 80%). The bank will need to employ some aggressive tactics to attract deposits that will allow them to grow risk assets substantially, which might subsequently put downward pressure on net interest margin (NIM) and stall the impressive earnings growth witnessed in Q2 of 2014,” they said.
 

Culled from thisdaylive.com