Union Bank’s 2021 revenue touches record high of N177.3 billion but profit drops

Nigeria’s second oldest financial institution, Union Bank, attained a revenue milestone in 2021 as its gross earnings for the year hit an all-time peak of N177.3 billion, its audited financials obtained from the Nigerian Exchange showed on Wednesday.

The feat rested on a more-than-double elevation in cash from recovered debt totalling as much as N15.9 billion.

Yet the earnings growth was incapable of shielding bottom-line against pressure from the interest the bank paid on securities including bond and also on deposits from customers and other lenders, forcing profit to slide below the preceding year’s level.

The lender spent N13.8 billion more on interest expense than it did for financial year 2021.

Turnover grew by 8 per cent from the N164.1 billion posted a year earlier, largely assisted by non-interest income, which increased by 26.7 per cent, Union Bank stated in a separate document providing key financial highlights.

Following an enhancement to our operating and go-to-market model to deliver better performance and efficiency leveraging our network across the regions, we are increasing our customer engagement and product penetration which is translating into higher customer revenues across geographies,” CEO Emeka Okonkwo said.

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Pre-tax profit fell by over one-fifth to N20.7 billion, while profit after tax came to N16.9 billion, 9.4 per cent weaker than the figure posted a year earlier.

That left profit margin, which measures how much of revenue has turned to profit, at 9.54 per cent.

In December, Titan Trust Bank, controlled by Tropical General Investment, an international investment firm focusing on emerging markets, got an approval-in-principle to buy an 89.4 per cent shareholding in Union Bank, and will be looking to replicate its success in digital banking to drive growth in the latter when the acquisition is done and dusted.

But it could face an avalanche of legacy debts arising from legal actions against Union Bank, which, the financial report said “has resulted in contingent liabilities amounting to ₦1.98 trillion as of 31 December 2021.”

Auditor Ernst & Young noted the figure was as high as N7.13 trillion a year earlier.