13/06/2011 09:38:00 IKECHUKWU OMEIFE & OKEY ONYENWEAKU, Business Hallmark
Union Bank of Nigeria Plc is set to shock industry stakeholders and the public when it announces its 2010 Financial Report. The report, which is yet to be releasedby the Bank, was exclusively obtained by Business Hallmark newspaper. If the Central Bank of Nigeria (CBN) and the Security and Exchange Commission (SEC) approve the Year 2010 Financial Report of the Bank now before the two bodies, it will announce a profit of N118billion. Usually reliable sources in the CBN who showed BH a copy of the Annual Report, expressed surprise at what industry stakeholders have dubbed, “a stunning performance.”
A detailed analysis of the Bank's performance revealed that it earned N129.205 billion in 2010 from N112.086 billion in the preceding year's which translates to an increase of 15.27 per cent. Its pre-tax profit grew from a position of loss (N279.786 billion) to N36.454 billion. In the same vein, its Profit After Tax (PAT) leaped to N106.472 billion from a loss of (N281.373 billion) previously. Profit attributable to shareholders leaped to N112.032 billion from loss of N281.173 billion previously.
However, customers' deposit slumped significantly from N957.329 billion to N645.987 billion, a decrease of 32.5 per cent. The catalyst for the drop in customers' deposit is being attributed to the run on the rescued banks recently as a result of the CBN policy decision for them to recapitalise their shareholders' base or face liquidation by the end of September. There is also a significant drop in Net Liability of the Group from N228.977 billion to N114.930 billion. (Total Liability – Total Assets=Net Liability).
...Grows profit by 17%
The Bank grew profit by 17 per cent as the Gross Earnings leaped from N97.387 billion in the preceding year to N113.961 billion. Similarly, its Pre-Tax Profit (PTP) also appreciated from a position of loss (N285.370 billion) to N47.438 billion while Profit BeforeTax (PBT) rose to N118.016 billion from a loss of (N286.168 billion) previously. All profit is attributable to shareholders. The Banks' Net Liability was, however, reduced by 46% from N253.910 billion to N135.891 billion. Customers' deposit dropped by 23.4% from N782.046 billion to N598.932 billion.
This is in sharp contrast to its 2009 result when it posted a gross earnings of N97.387 billion and a loss after tax of (N286.168billion).
In a document it published sometime ago entitled “The True State of Your Bank” and addressed to all members of the Union Bank staff, The Union Bank Association of Senior Staff had alleged in a sub-section entitled, “HOW THE SHAREHOLDERS' FUND WAS ERODED;” that the shareholders funds on August 3, 2009 stood at “N118bn. However, is an attempt to justify the CBN intervention, the directors debited the following into the bank's profit and loss accounts, which eroded the shareholders' funds.
Provision for other assets -N111.7bn (unbalanced books)
Provision for CBN/ RTGS - N22.7bn
Current /savings accounts
Staff Retirement Benefits - N84billion
Total - N218.40billion
The Union also alleged that N22 billion recovered from Global Fleet Oil and Gas had not been written back into the books of the bank as well as recovered placements with other banks, notably the inter-bank placement with Bank PHB which was recovered. The Union's position was that such huge provisioning and refusal to write back accruals, were all ploys embarked upon by the Executive Management of the bank in order to justify the CBN's position that the bank was distressed, and so validate the action of sacking the executive management and takeover of the bank.
However, it would appear as if the plan to sell the bank has hit turbulence. Sources close to the various staff unions of the bank confirmed to BH that they have embarked on feverish meetings to formulate strategies on how to prevent the forceful sale of the bank and save it for the shareholders and staff. A senior member of the Union told BH that, “our members have been jolted by the revelations of this broad day looting. This is a bank where we have slaved all these years and now a few people have come in to loot it under the guise of rescuing it. It is unbelievable!” A former director of the bank told BH that, “never before in the history of Union Bank have non-executive directors been paid terminal benefits. But just imagine the millions of naira in both local and foreign currencies; these people were paid just for retiring. Then to make matters worse, they still remained on the board after collecting those monies. What manner of corporate governance is that?”
BH had reported exclusively that three outgoing Directors of the Board namely, Prof. M.G. Yakubu, Engr. I.A. Gobi and Mr. Olusanya were paid over N300m in local and foreign currencies as terminal benefits. Curiously however, the directors are still serving on the board of the bank on the strength of an extension purportedly granted them at the Annual General Meeting of the bank which held in Maiduguri. Such huge payments and several others of a similar nature have continued to raise tension among the rank and file of the staff.
Comparative Financial Reports of UBN Plc and FBN Plc
Source: Business Hallmark (edited and published under permission)