Friday, March 19, 2021 / 8:49 AM / By NSE / Header Image Credit: Union Bank
Union Bank of Nigeria Plc released its 2020 Audited results for the period ended December 31st, 2020.
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Group Audited Financial Statements for the Year Ended December 31, 2020
Declares 25 kobo dividend per 50 kobo share
Business fundamentals strengthened despite Covid-19 impact
Union Bank has released its audited financial statements for the year ended 31st December 2020. The Bank's results for the period shows sustained growth in key income lines and significantly improved fundamentals notwithstanding a constrained operating environment largely due to the impact of the Covid-19 pandemic.
Union Bank's investments in technology and building a progressive work culture over the past eight years, enabled a swift response to the pandemic that allowed our workforce transition to remote working while maintaining the productivity required to deliver these strong set of results in 2020.
Bank Financial Highlights:
Key Operational Highlights:
- $200m 10-year funding from U.S International Development Finance Corporation (DFC)
- $75m Pandemic Trade Mitigation funding from Afrexim
- $30m working capital funding from IFC
- Customers: We deepened our engagement via digital platforms and reinforced our channels to enable self-service. Supported by the Central Bank, we also offered restructuring of loan terms for businesses affected by the outbreak of Covid-19 in key sectors of the economy. At our branches, heightened hygiene & social distancing guidelines were put in place.
- Community: We donated over â‚¦350m towards the fight against Covid-19. These included donations to the Private Sector Coalition against Covid-19 (CACOVID); 54gene to support testing and research, working with the Nigeria Centre for Disease Control (NCDC); and the Lagos State COVID-19 Emergency Food Response programme to support families affected by the pandemic.
- Business continuity: Operationally, the bank adapted as lockdowns and movement restrictions evolved during the year. We designed a work model that ensured operational efficiency while maintaining adequate contingencies that guaranteed business continuity should newly identified operational risks crystallize.
- Managing liquidity and credit risks: We focused on raising long term liabilities in local and foreign currencies. We also deepened our focus on essential sectors during the pandemic and enhanced portfolio diversity. With ongoing review of our credit portfolio and stress testing, we focused on promoting asset quality with solid risk management structures while leveraging CBN's forbearance opportunities.
Key partnerships in this area in 2020 include: MamaMoni, Pearls Africa, Awarri, LEAP Africa, Cece Yara Foundation, Junior Achievement Nigeria, GiveFood.ng Initiative, etc.
Commenting on the results, Emeka Emuwa, CEO said:
"The Bank has delivered a strong set of results notwithstanding the impact of COVID-19 on our operations and the wider economy, enabling the Board of Directors to continue to return value to shareholders with a proposed dividend payment for the second year in a row. This demonstrates the strong foundations we have built, as we continue to deliver against our target of becoming a leading financial institution in Nigeria.
For the full year, we grew across key income lines. Net income after impairments grew 8.3% from N95.5bn to N103.4bn and translated into 2.8% growth in Profit Before Tax to N25.4bn from N24.7bn.
The core of this performance is driven by the growth in our loan book, with 23.8% increase in gross loans, to N736.7bn from N595.3bn in 2019.
The pandemic accelerated trends in customer behaviour and we have seen rapid increase in digital adoption with a 38% YOY increase in active users on our UnionMobile channel with total active users now at 2.9 million. Our UnionOne and Union360 platforms for businesses grew by 11% from 25,000 users to 27,700 users. 94% of transactions in the Bank are now done digitally, up from 89% in 2019.
We also aggressively grew UnionDirect (our agent network) by 6x from 3,100 to 18,100 in line with our focus on our retail business. With our investments yielding positive results, we are well positioned as a strong leader in the retail and digital space.
In 2021, the Bank will focus on enhancing revenues and shareholder value by revving up customer acquisition, engagement and transactions through seamless customer journeys
and an optimized service delivery platform.
As I retire following eight years of rebuilding and repositioning this storied institution, I am convinced that with the excellent management team and a clear strategy in place, Union Bank is well positioned to continue to compete and deliver value to its shareholders.
Speaking on the FY 2020 numbers, Chief Financial Officer, Joe Mbulu said:
"We are pleased with both our top and bottom-line performance in 2020, in light of the impact of the pandemic and economic challenges. Significant inflationary pressures and the translation of currency depreciation drove growth in our cost base, however we maintained strong control, limiting operating expense increase to 10% (N77.9bn from N70.8bn), well below the rate of inflation. Consequently, we saw marginal increase in our cost to income ratio to 75.4% from 74.1%.
Our customer deposits hit a milestone during the year, crossing the N1tr mark to N1,131.1bn from N886.3bn in FY 2019, an increase of 27.1%. Low cost deposits were up by 17%, constituting 68% of total deposits helping to push cost of funds down by 1.4%.
We continued to proactively manage our growing risk asset portfolio and recorded better asset quality, with our NPL ratio improving from 5.8% to 4.0%. This achievement, combined with a solid capital adequacy at 17.5% and continued top-line growth, provides the platform for strong growth going forward.
We will continue to grow our loan portfolio in 2021, which we expect to be a significant driver of growth, combined with our value chain synergies across our business which will drive customer and transaction growth during the year and beyond.
Our UBUK subsidiary remains classified as "Available for Sale" as the sale process continues albeit delayed due to the pandemic-induced lockdowns".