Shareholders of Union Bank of Nigeria Plc. have approved the proposed reduction of N54.4 billion from the bank’s share premium account in a bid to restructure its balance sheet for optimal performance.
The shareholders endorsed the move during the bank’s Extra-Ordinary General Meeting (EGM) held recently in Lagos.
Union Bank’s financial position as at December 31, 2018, indicated a deficit of N 54.458 billion, representing accumulated permanent losses from legacy transactions. In a bid to offset the negative retained earnings, the bank’s Board of Directors proposed the Share Premium Reduction in accordance with sections 106 and 107 of Companies and Allied Matters Act (CAMA).
The transaction which is subject to confirmation by the Federal High Court, will have no impact on the bank’s creditors or its shareholders’ funds, but instead, is expected to pave the way for the payment of dividends to shareholders.
Commenting on the development, Chairman of the Board of Directors, Mr. Cyril Odu, highlighted the Bank’s focus on delivering value to its stakeholders. He said; “Union Bank is on course towards delivering its 2019-2021 strategic objectives. As we continue our push towards being Nigeria’s most reliable and trusted banking partner, we remain focused on improving the profitability of our business and delivering value to all our stakeholders – shareholders, customers, business partners and employees.”
Following the successful execution of the bank’s debut local currency bond issue to raise N13.5 billion and the tightening up of its loan portfolio, Union Bank remains well positioned to continue executing key business priorities in 2019 and beyond.
Union Bank reported a profit before tax of N5.4 billion for the first quarter ended March 31, 2019 same as was reported in 2018.
Its unaudited financial statement for the quarter released to newsmen showed gross earnings: down by five per cent to N37.7 billion as against N39.5 billion in Q1 2018; driven by a lower loan book base and declining yields in the current interest rate environment.
Net Interest Income after impairment was down 17 per cent to N12.9 billion from N15.5 billion in Q1 2018; a result of lower volume of earning assets.
Commenting on the results, Emeka Emuwa, the CEO said: “Our focus in 2019 is to leverage our platform to deliver efficiency and seek to maximize value across all areas of the bank.
In a low yield environment, the group’s non-interest income growth compensated for the slowdown in interest income stemming from the optimization of our loan portfolio in 2018. Consequently, Profit Before Tax (PBT) was maintained at N5.4 billion, consistent with Q1 2018.
Customer Deposits continue to grow, up 14 per cent YoY to N867.2 billion compared to N759.1 billion at the end of Q1 2018, driven by a 3 per cent increase in our low cost current and savings accounts deposit balances. Rebalancing our deposit mix is key as we push to conservatively rebuild our loan book with high quality risk assets.
In line with our priorities, we recorded a material improvement of 819 per cent in loan recoveries with N2.8 billion recovered during the period. Our asset quality continues to improve, with Non-Performing Loans (NPLs) down to 7.8 per cent from 8.7 per cent as at December 2018.
We are employing a multi-pronged approach focused on increasing revenue and optimizing cost to ensure we deliver enhanced performance in 2019.”
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