Connect with us
nairametrics

Company Results

Union Bank canters onward despite gallop from COVID-19

The rise in interest expense reflects the banks present struggles with generating low-cost deposit.

Published

on

Union Bank reports 33% growth in PBT for FY2019, Union bank releases FY 2019 financial result, records profit increase,Union bank releases FY 2019 financial result, records profit increase, COVID-19: UBN activates Flexiwork, COVID-19: Union Bank closes some branches, downgrades activities in FCT, Lagos, Ogun, Union Bank seals $40million partnership with IFC.

Union Bank made a profit of N10.7 billion in the Half Year (HY) of 2020 showing a reduced 9% from the N11.9billion posted y/y in 2019. The bank’s gross earnings upped by 10% to N79.9billion as at June 2020 from the N72.4billion in the earlier corresponding period. Interest income grew by 6.2% from N54billion to N57billion in June 2020 y/y, but when we consider interests and related expenses, we observe a 14% slump in the net interest income. These major components (profit, gross earnings and net interest income) at first glance summarily spells out the fortunes and how the bank has thrived thus far in 2020.

UNION is one of Nigeria’s oldest institutions that offers commercial banking services in Nigeria. It further offers wholesale banking services, brokerage, asset management services as well as mortgages through its subsidiaries.

As recently as January 2020, Union Bank divested shares in its London subsidiary and geographically streamlined its operations to harness its perceived abounding opportunities in the Nigerian market.

READ: FIDELITY BANK PLC: Frail earnings outlook but valuations still attractive

The Regulations and the Effects

The CBN’s stance on reducing transfer fees and card maintenance fees did impact Union Bank’s income, as commission income and other fees sank. The 24% improvement noticed in Non-interest income emanates materially from Foreign exchange revaluation gain, gains from disposal of fixed income securities and the consistently growing E-business fee income segment that generated N1.2billion in March 2019, N2.1billion in March 2020 and N3.7billion in June 2020.

GTBank 728 x 90

The increase in Cash Reserve Requirements ratio to 27.5% have further impaired the working capital available and accessible to Union Bank as it shelled out a further N118.7billion from Q2 in fulfilment of the increased cash reserve requirement.

READ: Akinwumi Adesina re-elected as AfDB’s President

Banks are having to adjust to the severity of the mandates and policies from the CBN which though understandably paramount, are perceived by some to be one-sidedly focused on consumer protection at the severe discomfort of financial institutions.

Deal book 300 x 250
GTBank 728 x 90

A snapshot of the major components in the profit or loss statement and their variances in billions of Naira are thus:

COVID-19 effects Q2 vs Q1

Owing to the lethargic restart of the economy after lockdown was instigated in major cities across the country, earnings and profitability understandably experienced reductions in the three-month span from the end of Q1 till June 2020

  • Profit in Q2 is 21.7% less than in Q1.
  • Gross earnings plummeted by 16% in Q2.
  • Operating income downed 8% from Q1’20.

COVID-19 by all indications is bane of world economy this year as it severely hampered earnings in Q2 when the virus peaked.  However Union Bank maximized this period to devastating effect by furthering its digital banking campaign drive and on-boarding majority of its customers on multifarious transactional channels. This yielded fruits as record shows that 90% of transactions were completed digitally in 2020 vs 57% in H1’2019. The top line impact of this is bound to reflect massively in the long run.

READ: United Capital Plc records 16% rise in profit to N1.9 billion in H1 2020

Jaiz bank ads

Commenting on the result, Emeka Emuwa, CEO said “The impact of COVID-19 and associated movement restrictions on the bank and wider economy has been broad. The total lockdown of major commercial centres and partial lockdown across the country, slowed business operations in Q2’20.” “…the slowdown limited growth in key income lines including fees and commission and cash recoveries”.

Fidelity ads

Ratios

Deposit from customers grew by 12% in 2020 while Interest expense consumed over 50.7% of interest income. The growth in deposits stems from increased customer demand for products depicting confidence in the UNION brand. The rise in interest expense reflects the banks present struggles with generating low-cost deposit.

Loan to Deposit Ratio is pegged at 65.1% in compliance with the Central Bank’s mandate. Cost to Income Ratio is at 75.5% while Return on Equity and Return on Assets are 8.5% and 1.2% respectively.

READ: Startimes, DStv, Others adjust prices as Nigerian businesses battle tough economic conditions

The bank continues to match stride for stride with New Generation Banks in the aspect of digitalization evidenced by the additional N1 billion generated from its E-business fee in HY 2020. Union Bank has literally come a long way over the decades of its existence with its iconic white stallion in steady motion. Like the CEO stated, Union must navigate the realities of the pandemic for the remainder of the year, and continue to focus on increasing transaction volumes on electronic channels, managing cost and strategically targeting key customer segments to ensure it finishes subsequent quarters on a high.

Ekene Onyeama is a Chartered Accountant currently plying one of the Tier one Banks in Nigeria. He started out his career at Ideascorp Limited, a private company in the hospitality industry where he served as the accountant before switching to banking. Ekene enjoys analyzing companies. He likes to write and is very excited by company valuations. He can be reached on Twitter @Ekenergy_

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Company Results

Seplat declares a total interim dividend of $29 million for shareholders

The Interim dividend of US$0.05 per share will be paid on all the outstanding 588,444,561 ordinary shares of the company.

Published

on

Seplat Petroleum Development Company Plc, a leading Nigerian independent energy company listed on both the Nigerian Stock Exchange and London Stock Exchange, has announced the payment of a total $29,422,228.05 as interim dividend to shareholders.

This information is contained in its notification dated 30 October, 2020, which was signed by the Company Secretary, Mr. Emeka Onwuka, and sent to the floor of the Nigerian Stock Exchange today.

The notification partly reads:

“Seplat Petroleum Development Company Plc (“Seplat” or the “Company”), a leading Nigerian independent energy company listed on both the Nigerian Stock Exchange and London Stock Exchange, today announces an interim dividend at a rate of US$0.05 (United States Five Cents) per Ordinary Share (subject to appropriate WHT) to be paid to SEPLAT’s shareholders whose names appear in the Register of Members as at the close of business on 13th November 2020.”

What you should know

GTBank 728 x 90
  • The Interim dividend of US$0.05 per share will be paid for all the outstanding 588,444,561 ordinary shares of the company owned by the shareholders of the leading energy company, and this gives a total interim dividend of $29,422,228.05, to be distributed to the shareholders of the company.
  • The Interim Dividend of US$0.05 (United States Five Cents) per Ordinary Share of N0.50k each (subject to appropriate withholding tax) will be paid to shareholders whose names appear in the Register of Members as at the close of business on 13th November, 2020.
  • To enable SEPLAT’s Registrar, Datamax Registrars Limited, prepare for the payment of the interim dividend, the Register of Shareholders will be closed on 16th November 2020.
  • On the London Stock Exchange, the Associated Record Date will be 13th November, 2020, and the Ex-Dividend date will be 12th November, 2020.
  • The exchange rate for the naira or pounds sterling amounts payable will be determined by reference to the relevant exchange rates applicable to the US dollar on 12th November, 2020, and will be communicated by the Company on 13th November, 2020.
  • On or around 7th December, 2020, the interim dividend will be paid electronically to shareholders whose names appear on the Register of Members as at 13th November 2020, and who have completed the e-dividend registration and mandated the Registrar to pay their interim dividend directly into their Bank accounts.
  • Shareholders with dividend warrants and share certificates that have remained unclaimed or are yet to be presented for payment or returned for validation are advised to complete the e-dividend registration or contact the Registrar.

Continue Reading

Company Results

UACN Property Development Company Plc: Decrease in sale of property stock, others depletes revenue

UACN Property Development Company Plc recorded decreased revenues from its four revenue-generating units, as total revenues dipped.

Published

on

UACN Property Development Company Plc

UACN Property Development Company Plc recorded decreased revenues from its four revenue-generating units, as total revenues dipped. The company reported revenues of N458.26million in 2020 (9months) – 75.81% decrease compared to N1.90billion in the corresponding period of 2019. 

READ: UPDC reaps benefits of NSE’s resilience with listing of N16 billion Rights Issue

What you should know 

Key highlights from its 2020 (9months) results are:

  • Revenues decreased by 75.81% from N1.90billion to N458.26million YoY. 
  • Revenues from sale of property stock decreased to N137.51million, -89.69% YoY. 
  • Revenues from share of James Pinnock sale of property stock decreased to N45.39million, -82.75% YoY.
  • Revenues from rental and management fee on rent decreased to N78.11 million, 25.71% YoY. 
  • Revenues from project and management surcharge decreased to N192.25 million, –0.26% YoY. 
  • Gross profit decreased to N107.94 million, -71.61% YoY. 
  • Operating loss decreased to N378.72 million, -1.85% YoY. 
  • Finance cost decreased to N1.30 billion, -41.03% YoY. 
  • Pre-tax loss increased to N2.46 billion, +34.65% YoY.
  • Post-tax loss decreased to N3.38 billion, -76.96% YoY. 
  • Earnings Per Share decreased to N29 kobo, -94.90% YoY. 
  • Total assets decreased to N26.93 billion, -14.53% YoY. 
  • Total liabilities decreased to N12.56 billion, -55.33% YoY. 
  • Total equity increased to N14.38 billion, +322.37% YoY. 

READ: Austin Avuru retires as CEO of Seplat petroleum, to receive huge benefits

GTBank 728 x 90

Bottomline 

UACN Property Development Company Plc recorded decreased revenues from its four revenue-generating units, as total revenues dipped.

Companies have generally recorded decreased revenues in the last three quarters, mostly due to COVID-19. UACN Property Development Company Plc was unable to increase its total revenues and pre-tax profits in the period under consideration.

Deal book 300 x 250
GTBank 728 x 90

Continue Reading

Company Results

Portland Paints and Products Plc: Decrease in paint sales depletes revenues

Portland Paints and Products Plc recorded decreased revenues in one of its revenue-generating units, as total revenues dipped.

Published

on

Bolarin Okunowo, Portland Paints and Products Nigeria Plc appoints Non-Executive Director, Portland Paints announces new board changes, Portland Paints and Products Plc: Decrease in paint sales, depletes revenues. 

Portland Paints and Products Plc recorded decreased revenues in one of its revenue-generating units, as total revenues dipped. The company reported revenues of N1.23 billion in 2020 (9 months) – 38.43% decrease compared to N1.99 billion in the corresponding period of 2019.

READ: CAP Plc set to merge with Portland Paints and Products Plc.

What you should know

Key highlights from 2020 (9 months) results

  • Revenues decreased by 38.43%, from N1.99 billion to N1.23 billion YoY.
  • Revenues from paints decreased to N1.22 billion, -38.72% YoY.
  • Recorded revenues of N502 thousand on executed projects, +100% YoY
  • Revenues from franchise/management fees increased to N7.21 million, +142.33% YoY.
  • Gross profits decreased to 385.35 million, -45.43% YoY.
  • Operating profit decreased to N-102.62 million, -175.89% YoY.
  • Finance cost increased to N6.73 million, +51.52% YoY.
  • Pre-tax profits decreased to N-106.58 million, -175.48% YoY.
  • Post-tax profits decreased to N-115.45 million, -220.24% YoY.
  • Earnings Per Share decreased to -15 kobo, -225% YoY.
  • Total assets decreased to N1.80 billion, -9.19% YoY.
  • Total liabilities decreased to N530.45 million, -12.48% YoY.
  • Total equity decreased to N1.47 billion, -7.94% YoY.

(READ MORE:Big players in Paints and Coatings industry suffer 52% profit loss in the first 6 months of 2020)

GTBank 728 x 90

Bottom Line

Portland Paints and Products Plc recorded decreased revenues in one of its revenue-generating units, as total revenues dipped.

Companies have generally recorded decreased revenues in the last three quarters mostly due to COVID-19. Portland Paints and Products Plc was unable to grow its revenue. The company also recorded a pre-tax loss in the period under consideration.

Deal book 300 x 250
GTBank 728 x 90

Continue Reading
Advertisement
Advertisement
Advertisement
ikeja electric
Advertisement
Advertisement
Patricia
act markets
Advertisement
FCMB ads
Advertisement
IZIKJON
Advertisement
Fidelity ads
act markets
Advertisement
first bank
Advertisement
bitad
Advertisement
Stallion ads
Advertisement
financial calculator
Advertisement
deals book
Advertisement
app
Advertisement