More Task Ahead for Unity Bank to deal with.
The (Unity Bank Plc) is negotiating with potential investors for investment in its equity to address the negative capitalisation.
Management is optimistic that negotiations shall be successful. Consequently, management is of the opinion that the application of the going concern assumption is appropriate.
According to the bank, the loss resulted from the decision to totally de-risk its balance sheet in order to create improved shareholder value.
the Unity Bank recorded net interest income of N51.177 billion in 2017, up from N49.476 billion in 2016, while net fee income stood at N1.684 billion compared with N1.642 billion in 2017. Total operating income fell to N54.473 billion, compared with N64.111 billion the previous year.
Impairment loss rose from N35.949 billion to N44.251 billion. Although the bank reduced personnel and other expenses from N11.634 billion and N12.794 billion to N10.864 billion and N11.801 billion respectively, the huge impairment charges made the financial institution to close the year a loss of N14.242 billion as against a profit after tax (PAT) of N1.816 billion in 2016.
A further analysis of the results indicated that total loans and advances declined from N277l2 billion to N8.958 billion while customers’ deposits stood at N253 billion compared with N264 billion the previous year.
But given the nine months results of the bank, it has returned to profitability, though showing a decline compared with the corresponding period of 2017.
In nine months performance indicated gross earnings of N26.125 billion in 2018, down from N65 billion in 2017. Net interest income fell from N38.51 billion, just as net fee income reduced to N9.926 billion as against N1.181 billion. Consequently, net operating income declined to N21 billion to N16 billion. Profit stood at N644 million as against N2.72 billion.
This one-off de-risking strategy that has cleaned up the bank’s books impacted the bottom-line leading to a net loss of N14.2 billion,” it said.
Unity Bank explained that the ratio of non-performing loans standing at zero per cent, a clear indication of the management’s excellent risk assessment for the period. The performance indicated a marginal loan-to-deposit ratio of 3.6 per cent, pointing towards a significant room for growth and the attendant income boost.