UNITY Bank of Nigeria Plc has announced a total derisking of its balance sheet, ridding the bank of toxic legacy assets and paving the way for significantly improved return on shareholder value in the coming years.
Already, signs of a return to improved performance was evident in the third quarter, 2018 result of the bank which showed a profitability of N644 million.
According to the 2017 annual report of the bank, made available to the Nigerian Stock Exchange (NSE), Unity Bank has written off a total of N16 billion, being goodwill that arose from legacy merger issues. This one-off derisking strategy that has cleaned up the bank’s books impacted the bottomline leading to a net loss of N14.2 billion.
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The report also showed 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 report also indicated a marginal Loan-to-Deposit Ratio of 3.6 per cent, pointing towards a significant room for growth and the attendant income boost.
In a statement, the bank said although financial performance declined in 2017, as the bank took action to tackle the lingering effects of legacy problems, the new board and management of the bank took firm and strategic action in a bid to eliminate the drag on the bank in the form of huge legacy non-performing loans, an inefficient operating structure which manifested in excessive costs, poor branch spread and inadequate application of technology amongst others.
These strategic initiatives, amongst others, the report continued, are geared towards a complete transformation of the bank and setting it on the path of strong and sustainable growth and profitability.
“The courageous action taken by the Bank towards cleaning up the observed issues thus resulted in a negative capital base but also gave birth to a leaner, smarter and dynamic Bank with a healthy Balance Sheet,” the report stated.
To sustain the new momentum and return the bank to one of the best performing in the Nigerian market, the bank said it has been making significant progress in its ongoing capital raising exercise. the Bank is firmly on course to achieve sustainable growth and sound performance.
Unity Bank said it is optimistic that its liquidity and working capital will be significantly enhanced with the anticipated successful capital raising exercise, a development that ispised to make the bank one of the most liquid in the Nigerian market.
It also said that with a 0 per cent non-performing loans portfolio and the now enhanced credit management process, Unity Bank has solved its debilitating legacy problems and will move more sure-footedly towards sustained revenue and profits growth, while capital adequacy is expected to rise above the regulatory minimum after the capital raising exercise.
In addition to this, the bank said it has taken a number of strategic initiatives among which include; a revised market focus that has, and will continue to increase agriculture and agro-allied financing, youth and digital banking and women financing; enhanced retain banking drive; cost containment, among others
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