UNION BANK BEGINS RECAPITALISATION
Summary:
Union Bank of Nigeria has initiated a recapitalisation process, as disclosed by the Managing Director/CEO, Yetunde Oni, following the release of the bank's half-year financial results. This move aligns with the Central Bank of Nigeria's (CBN) directive for banks to increase their capital base, part of a broader strategy to support Nigeria's economic growth.
Key Points:
1. Recapitalisation Initiative:
- Union Bank has begun its recapitalisation process to align with the CBN's banking sector recapitalisation programme. This programme mandates banks to increase their minimum paid-in common equity capital by April 2026 based on their license category.
- The recapitalisation is intended to enhance the bank's capital adequacy, strengthen financial stability, and position Union Bank to capitalize on emerging market opportunities.
2. Financial Performance for H1 2024:
- Union Bank reported a 58.19% increase in gross earnings, reaching N333 billion in the first half of 2024, compared to N210.5 billion during the same period in 2023.
- Profit before tax also grew by 20%, from N66.5 billion in H1 2023 to N79.8 billion in H1 2024. Net operating income after impairments increased by 32% to N143.6 billion.
3. Banking Sector Recapitalisation Programme:
- The CBN has directed banks with international authorization to raise their capital base to N500 billion, national banks to N200 billion, and regional banks to N50 billion. This directive is part of efforts to drive President Bola Tinubu's $1 trillion economy projection.
- In line with this directive, Union Bank's recapitalisation efforts aim to exceed regulatory capital requirements, ensuring the bank remains financially robust and competitive.
4. Challenges and Strategic Priorities:
- The bank faced challenges such as a high inflationary environment, exchange rate volatility, and increased operational costs, which impacted non-interest income and operating expenses.
- Despite these challenges, Union Bank remains focused on strategic priorities, including digital growth, enhancing its wholesale banking structure, and expanding its partnerships. These strategies are reflected in the bank's financial performance and its efforts to maintain a cost-to-income ratio below 50%.
5. Loan Book and Customer Deposits:
- The bank's gross loans increased by 24% to N1.93 trillion, reflecting cautious growth amid socio-economic pressures.
- Customer deposits grew marginally by 1% to N2.36 trillion, indicating the impact of economic challenges on the bank's operating environment.
Summary:
Union Bank of Nigeria has initiated a recapitalisation process, as disclosed by the Managing Director/CEO, Yetunde Oni, following the release of the bank's half-year financial results. This move aligns with the Central Bank of Nigeria's (CBN) directive for banks to increase their capital base, part of a broader strategy to support Nigeria's economic growth.
Key Points:
1. Recapitalisation Initiative:
- Union Bank has begun its recapitalisation process to align with the CBN's banking sector recapitalisation programme. This programme mandates banks to increase their minimum paid-in common equity capital by April 2026 based on their license category.
- The recapitalisation is intended to enhance the bank's capital adequacy, strengthen financial stability, and position Union Bank to capitalize on emerging market opportunities.
2. Financial Performance for H1 2024:
- Union Bank reported a 58.19% increase in gross earnings, reaching N333 billion in the first half of 2024, compared to N210.5 billion during the same period in 2023.
- Profit before tax also grew by 20%, from N66.5 billion in H1 2023 to N79.8 billion in H1 2024. Net operating income after impairments increased by 32% to N143.6 billion.
3. Banking Sector Recapitalisation Programme:
- The CBN has directed banks with international authorization to raise their capital base to N500 billion, national banks to N200 billion, and regional banks to N50 billion. This directive is part of efforts to drive President Bola Tinubu's $1 trillion economy projection.
- In line with this directive, Union Bank's recapitalisation efforts aim to exceed regulatory capital requirements, ensuring the bank remains financially robust and competitive.
4. Challenges and Strategic Priorities:
- The bank faced challenges such as a high inflationary environment, exchange rate volatility, and increased operational costs, which impacted non-interest income and operating expenses.
- Despite these challenges, Union Bank remains focused on strategic priorities, including digital growth, enhancing its wholesale banking structure, and expanding its partnerships. These strategies are reflected in the bank's financial performance and its efforts to maintain a cost-to-income ratio below 50%.
5. Loan Book and Customer Deposits:
- The bank's gross loans increased by 24% to N1.93 trillion, reflecting cautious growth amid socio-economic pressures.
- Customer deposits grew marginally by 1% to N2.36 trillion, indicating the impact of economic challenges on the bank's operating environment.