Unity Bank Plc (NGX: UNITYBNK) has bucked the trend in the 9 months period earnings season to report a loss of N47.9bn.
Also read; GSK Nigeria shareholders to receive cash of N17.42 per share
While other commercial banks reported bumper profits for the period ended 30 September, 2023, mostly due foreign exchange revaluation gains, the bank report a N38.16bn foreign exchange revaluation loss.
Unity Bank had on Thursday released its financial statements for the third quarter of 2023.
A review of the statement of comprehensive income shows that while the bank recorded decline in all income streams, it recorded an increase in its expenses.
A review of the bank’s balance sheet showed that the bank is in an asset deficient situation.
Asset deficiency is a situation where a company’s liabilities exceed its assets. Asset deficiency is a sign of financial distress and indicates that a company may default on its obligations to creditors and may be headed for bankruptcy.
Review of the Financial Statements
Income Statement:
- Gross Income: Unity Bank Plc reported a 9.72% decline in Gross income, as it posted N38.18bn for 9M 2023, against N42.29bn reported in 9M 2022.
- Interest and similar Income: The bank’s interest income dropped by 8.96% from N36.25bn to N33.01bn. Interest from loans and advances to customers was the biggest contributor with N25.21bn (9M 2022: N29.03bn). N23.54bn was recorded as interest expense, against N21.73bn reported in 9 2022.
- Fee and commission income: Unity Bank reported a drop of 17.80% in Fee and commission income, as it posted an income of N4.38bn (9M 2022: N5.33bn). E-banking contributed the most to this income, brining in N2.21bn (9M 2022: N2.71bn). Account maintenance fee added N0.91bn (9M 2022: N1.13bn), while credit related fees & commission brought in N0.97bn (9M 2022: N1.23bn).
- Foreign exchange revaluation: Unity Bank a foreign exchange revaluation loss of N38.16bn (9M 2022: N54.00mn loss). The bank earned N314.18mn from FX trading (9M 2022: N339.96mn).
- Personnel expenses: The personnel expenses of the company rose by 22.19% from N8.46bn in 9M 2022 to N10.34bn. A bulk of this was spent on wages and salaries; N9.95bn (9M 2022: N8.07bn), while the rest were on contributions to defined contribution plans and defined benefit costs.
- Other operating expenses: The Bank’s operating expenses increased by 10.57% from N10.14bn to N11.21bn. Administrative and regulatory expenses were the biggest items on the expense list with N6.70bn (9M 2022: N5.81bn) and N3.59bn (9M 2022: 3.44bn respectively).
- Profit Before Tax: There was a 2263.46% drop in the profit before tax, from a gain of N2.20bn to a loss of N47.72bn.
- Profit After Tax: Unity Bank Plc posted a loss after tax of N47.91bn, 2461.61% drop from the profit after tax of N2.02bn it reported in the preceding period in 2022.
Balance Sheet:
- Total Assets: The Bank’s total asset dropped by 17.01%, from N510.14bn as at 31 December, 2022 to N423.35bn. Net Loans and advances to customers amounting to N222.79bn (31 Dec. 2022: N289.35bn) was the biggest component of the bank’s asset.
- Total Liabilities: The total liabilities also dropped by 21.85% from N785.09bn to N613.57bn. Deposits from customers constituted a bulk of the liabilities, accounting for N344.39n (31 Dec. 2022: N327.42bn) of the N613.57bn.
- Shareholders’ Fund: The shareholders’ fund went from minus N274.94bn to minus N190.22bn.
Cashflow:
- Operating activities: N16.52bn was used in operating activities, as against N53.13bn used in 9M 2022.
- Investing activities: N3.30bn was used in investing activities, while N7.78bn generated in 9M 2022.
- Financing activities: N36.48bn was used in financing activities, against N17.76bn used for the same activity in 9M 2022.
- Cash and cash equivalents: As at 30 September, 2023, Unity Bank Plc had cash and cash equivalent of N54.03bn (30 September, 2023: N68.27bn).
About the Company
Unity Bank Plc provides Banking and other financial services to corporate and individual customers. Such services include but are not limited to granting of loans and advances, corporate Banking, retail Banking, consumer and trade finance, international Banking, cash management, electronic Banking services and money market activities.
Unity Bank is a Public Limited Liability company incorporated in Nigeria to carry on the business of Banking. The Bank’s shares are listed on the Nigerian Stock Exchange.
It has 11.68bn outstanding shares. As at 31 December 2022, Asset Management Corporation of Nigeria (AMCON) was the highest shareholder of the bank holding 34.22% of its shares.
Its registered office is at 42, Ahmed Onibudo Street, Victoria Island, Lagos.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur