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Union Bank: Crawling Performance May Erode Investment Gains From Technology


September 26, (THEWILL) – Union Bank of Nigeria Plc is investing hugely in technology. It is not lagging in this digital age that has reconfigured the banking landscape.  But the bank’s 2021 half- year report shows a lender struggling to match the speed of the ‘galloping stallion’ (symbol of its logo) and this has been the trend in the past five years.

Compared with the corresponding period of 2020, Union Bank’s performance, to a large extent, points in the opposite direction of the ‘galloping stallion’: Most of the fundamentals are negative. In the few cases that positive results were recorded, the difference was more of a thin-line.

While the massive investment in infrastructure could provide a measure of relief, some stakeholders share the concern that the firm’s crawling growth could erode the gains.  There are also fears it could impact adversely on Return on Investment – achieved through dividends or capital appreciation.


Gross earnings for the 2021 half-year was N76.31 billion as against N81.9 billion in the corresponding period of 2020, representing 6.8 percent. Net interest income after impairment was also negative: N20.34 billion compared to N22.7 billion or 10.3 percent. Although the net fee and commission income rose to N6.59 billion from N5.05 billion in 2020, representing 30.4 percent, profit after tax recorded a negative variance of 11.3 percent. It fell from N10.7 billion in the corresponding period of 2020 to N9.84 billion in the 2021 half year. Profit before tax was equally negative. It dipped by 9.7 percent during the period – N10.3 billion from N11.3 billion in 2020.

Deposits from customers rose slightly to N1.16 trillion during the period from N1.12 trillion in 2020, which is a 3.6 percent rise; while loans and advances to customers at a mortised cost were flat at N734.05 billion. Total assets also recorded a slight increase of 2.2 percent from N2.16 trillion to N2.21 trillion in 2020 and 2021, respectively. Amid the choking effects of high inflation, operating expenses jumped to N48.14 billion during the period from the N31.66 billion recorded in the corresponding period of 2020, representing 52 percent.

The current slow-down in the bank’s performance began to manifest about five years ago when the periodic reports revealed negative and weak key fundamentals. Gross earnings dropped to N76 billion in the 2019 half-year, from N83.3 billion recorded in the corresponding period of 2018, representing 8.76 percent.  Profit after tax rose slightly by 3.5 percent from N11.5 billion to N11.9 billion in first half of 2018 and first half of 2019, respectively.

The key ratios also became har-bingers of the present condition: Net interest margin slid to 7.8 percent in 2017 from 8.6 percent in 2016, while cost to income rate also recorded a decline – from 65 percent to 61 percent.  Return on equity, which stood at 5.9 percent in 2016 dipped to 4.7 percent in 2017 as net asset value per share recorded a drop of 11.87 percent from 16 percent in 2017 and 2016, respectively.  However, asset yield rose slightly to 15.7 percent in 2017 from 14.5 percent in 2016.


Union Bank has stepped up its infrastructure upgrade and acquisition through its digital driving strategy, especially since the historic ‘smarter banking’ rebranding project of 2015 when it unveiled a plethora of digital banking solutions.  It launched its upgraded online banking platform, UnionOnline, with aesthetic improvements, new features and targeted offers for its customer segments at the time.

The then Chief Executive Officer, Emeka Emuwa, was quoted as saying, “Smarter banking is not just a tagline for us. We have worked tirelessly for nearly two years to deliver the solutions we are presenting today because we invested time and resources to understand what our customers really need and how we can deliver the right solutions to meet those needs.

“This investment in unders-tanding our customers’ needs has led to the innovations and first-to-market features we are unveiling today. Our new platforms marry simplicity, functionality and aesthetics to deliver a seamless and improved user experience for our customers.”

Among its latest digital infras-tructure is the M36 meant to deliver a wide range of investment products directly to individuals. According to the bank, M36 as an innovative user-friendly app, offered investment options not typically available on self-service digital platforms. These include foreign currency transactions, commercial papers, local and foreign denominated bonds, treasury bills and other fixed income products,

“In a rapidly evolving environ-ment with a changing con-sumer behaviour fuelled by technology and growing access to information, M36 is looking to expand opportunities for investors at all levels, while also simplifying the process of investing”, the bank said in a statement in July 2017.

The bank’s N50 billion rights issue of 2017 was meant to strengthen its capital buffers and invest in technology and digitalization, which included the upgrade of nearly 300 branches to a more robust digital transformation. The bank said in 2017 that it recorded N130 billion monthly online transactions and 250,000 active online banking users.

The Chairman, Association of Stockbroking Houses of Nigeria (ASHON), Patrick Ezeagu, commended Union Bank for the foresight to invest massively in ICT infrastructure. He said the lender has taken the right decision because that is what the business demands at this time.

“We are now in the fourth industrial revolution and ICT infrastructure is what drives the economy. I can tell you that any organisation that fails to invest in technology will find out that it is no longer in business when the time comes. This is the time to do what Union Bank is doing; it may take some time to see the real result, though,” Ezeagu told THEWILL in a telephone interview.


Some institutional and high networth investors have acquired stakes in Union Bank in recent times which has strengthened the lender’s recapitalisation programme. African Capital Alliance (ACA) led a consortium of international investors (Union Global Partners) to recapitalise Union Bank in 2012. The consortium invested $500 million for a controlling stake in the bank. ACA invested $75 million as part of the consortium.