Union Bank of Nigeria has announced the start of a recapitalisation process, following the release of its impressive half-year financial results. The bank’s Managing Director/Chief Executive Officer, Yetunde Oni, revealed this development while highlighting the bank’s strong financial growth, including a significant 58.19% rise in gross earnings for the first half of 2024. The bank reported gross earnings of N333 billion, up from N210.5 billion during the same period in 2023. Additionally, profit before tax increased to N79.8 billion, compared to N66.5 billion last year.
This recapitalisation move aligns with the Central Bank of Nigeria’s (CBN) directive for banks to increase their capital base to support the nation’s economic growth. In March, the CBN mandated that commercial banks with international licenses must increase their capital base to N500 billion, national banks to N200 billion, and regional banks to N50 billion. This directive aims to drive Nigeria’s economy towards the $1 trillion mark projected by President Bola Tinubu.
Earlier this year, the CBN dissolved the board of Union Bank and appointed a new managing director and executive director to guide the bank through this transition. Oni emphasized that the recapitalisation process is essential for the bank to meet regulatory standards and strengthen its financial stability. She stated, “Our focus remains on building a controlled, compliant, and profitable organization. We are committed to maintaining strong governance frameworks, ensuring regulatory compliance, and driving sustainable profitability.”
Oni expressed confidence that these steps would not only align Union Bank with CBN requirements but also position it to seize new opportunities in the market. She added that the bank’s ongoing strategy is already yielding positive results, as evidenced by the strong financial performance in the first half of the year.
Union Bank’s Acting Chief Financial Officer, Oluwagbenga Adeoye, echoed Oni’s sentiments, noting that the bank’s resilience was evident in its performance despite challenges like high inflation, exchange rate volatility, and increased operating costs. He highlighted the 32% increase in Net Operating Income after impairments, which rose to N143.6 billion, driven by enhanced interest income, fees, commissions, and margin expansion.
However, Adeoye also pointed out some challenges the bank faced. Non-interest income slightly declined by 3% to N108.3 billion, due to foreign exchange revaluation losses. Additionally, operating expenses surged by 52% to N63.8 billion, primarily because of inflation, higher power costs, and increased regulatory expenses. Despite these pressures, Union Bank maintained a cost-to-income ratio of 44%, which, although higher than the 39% recorded in the first half of 2023, still reflects the bank’s efforts to manage costs effectively.
On the lending front, Union Bank continued to grow its loan portfolio cautiously. Gross loans increased by 24% to N1.93 trillion, up from N1.55 trillion in December 2023. Customer deposits also saw a slight increase of 1%, rising to N2.36 trillion from N2.34 trillion at the end of 2023. This growth in loans and deposits reflects the bank’s ability to navigate socio-economic pressures while maintaining its focus on providing value to its customers.
As Union Bank moves forward with its recapitalisation efforts, it remains focused on building a stable and profitable organization that can capitalize on emerging opportunities in Nigeria’s evolving financial landscape.
