Union Bank Reports 138% Profit Growth in 2023 While Continuing with its Restructuring Measures

The second-oldest bank in Nigeria, Union Bank of Nigeria, declared a pre-tax profit of N71.8 billion for the entire 2023 fiscal year, a 138% increase over the N30.2 billion reported for the 2022 fiscal year.

This is as the bank proceeds with its plans for restructuring after the central bank, led by Yemi Cardoso, cancelled its takeover of Titan Trust Bank.

According to reports, the bank is reportedly taking into account strategic investors’ possible investments in accordance with the central bank’s objectives for recapitalisation.

Growth in earnings

During the period, the bank’s gross earnings of N393.6 billion were recorded, an 89% increase over the N208 billion reported in FY 2022.

The bank’s net interest income for the entire year came to N90.4 billion, a 53% increase over the N59.1 billion it earned in 2022.

Net impairment costs, however, increased dramatically, from N4.5 billion in FY 2022 to N58.5 billion in FY 2023. As a result, the bank’s net interest income after impairment losses fell by 42%.

Highlights of FY 2023 compared to FY 2022 

• Gross Earnings: N393.6 billion, representing an 89% increase year-over-year (YoY).
• Interest Revenue: N249.4 billion, marking a 69% YoY growth.
• Interest Expense: N65.8 billion, up by 47% YoY.
• Net Interest Income: N90.4 billion, an increase of 53% YoY.
• Impairment Charges: N58.5 billion, a staggering 1208% YoY surge.
• Net Fee and Commission Income: N17.7 billion, showing a 39% YoY rise.
• Net Trading Income: N118.3 billion, a significant 402% YoY jump.
• Net Non-Interest Income: N138.0 billion, up by 150% YoY.
• Operating Income: N169.8 billion, reflecting a 55% YoY increase.
• Total Expenses: N98 billion, a 23% YoY growth.
• Profit Before Tax: N71.8 billion, up by 138% YoY.
• Profit After Tax: N65.9 billion, a 127% YoY increase.
• Total Assets: N4.23 trillion, growing by 52% YoY.
• Loans and Advances to Customers: N1.48 trillion, a 53% YoY rise.
• Customer Deposits: N2.34 trillion, increasing by 58% YoY.

The company reported a net foreign exchange revaluation loss of N226 billion in the financial accounts, which may qualify it for an exemption from the 70% windfall tax on realised net foreign exchange profits.

The bank reported N118.3 billion in net trading revenue for the year, up 402% from the N23.6 billion trading gain in FY 2022, despite the net foreign exchange loss.

In addition, Union Bank reported N215.9 billion in net income from its financial instruments, up 3242% from N6.46 billion in 2022.

What to note

Titan Trust Bank has been in the centre of a contentious ownership dispute surrounding Union Bank for the last few years. The CBN questioned the deal’s legality after declaring a 100% takeover of the bank, which would have resulted in the bank’s delisting from the NGX in 2022.

The Union Bank takeover procedure by Titan Trust Bank was implicated in the December 2023 report of the special investigation into the activities of the Central Bank of Nigeria under Godwin Emefiele.

Titan Trust Bank denied the findings of the Obazee probe, but in January 2024, the Union Bank board decided to postpone the bank’s acquisition. However, since 2022, there has been little information available about Union Bank’s corporate activity as the bank is no longer quoted on the NGX.

With N148.1 billion in paid-up share capital, the bank must raise at least N51.9 billion from its current capital base to fulfil the N200 billion minimum capital needed to obtain a national banking licence.