Unity Bank Speeds Up Loan Recoveries, Nets N1.4b In H1
Unity Bank Plc gained momentum on the loan recovery track in the second quarter, pushing up net write back position from N66 million in the first quarter to about N720 million at the half year. Loan recovery of N787 million was achieved in the second quarter and the bank is headed for a net loan impairment write back for the second year.
This enabled an increase of 18 per cent in net operating income year-on-year to almost N14 billion at the end of the review period.
The loan recovery and net write-back of loan impairment expenses helped to boost the bottom line with a closing after-tax profit of N1.4 billion at half a year in June 2021. The bank closed last year’s operations with a net write-back of loan impairment charges of over N4 billion.
Profit outlook is elevated for the bank so far this year at an increase of 34 per cent year-on-year at the end of half tear operations. This is a change of direction from a drop of 38 per cent in after-tax profit to N2 billion at the end of last year.
The improving risk asset quality has continued to encourage expansion of customer loans and advances, which grew by 94 per cent last year and also by 22 per cent to N247 billion at the end of half-year operations.
Revenue performance improved in the second quarter with an impressive growth of 17 per cent in gross income quarter-on-quarter. This changed the year-to-date reading for the bank from a 3 per cent drop in gross earnings in the first quarter to a 3 per cent growth at half a year to close at N23.6 billion.
Fee and commission income is leading revenue growth so far in the year at an increase of 21 per cent year-on-year to N3 billion at the end of June 2021. Interest income was up by 2 per cent to over N20 billion while other operating income dropped by 27 per cent to N366 million over the same period.
Net trading income closed in the negative territory at N104 million at half-year but nothing to compare with the net trading loss of N3.8 billion at the end of last year.
The bank’s management applied cost moderation to reinforce the moderate improvement in revenue. This enabled an increase in net profit margin from 4.4 per cent in the same period last year to 5.8 per cent at the end of June 2021.
Interest expenses remain a major cost-saving area with a decline of 3 per cent to over N10 billion against the 2 per cent increase in interest income. This enabled an increase of 9 per cent in net interest income to nearly N10 billion at the end of half-year.
A change of status in respect of credit loss expenses over the review period saved cost and boosted earnings performance further. Against a net loan impairment expense of N311 million in the same period last year, a net write-back of N720 million was recorded at the end of half-year operations.
This resulted in an increase of 18 per cent in net operating income to roughly N14 billion at the end of the period.
Total operating expenses accelerated from a 9 per cent increase in the first quarter to 16 per cent at half a year to close at over N12 billion. The expenses claimed 52.6 per cent of gross earnings.
However, the cost-saving made from interest and loan impairment expenses enabled the bank to moderate the impact of growing operating expenses on profit margin. The ability to keep profit margin up against the moderate improvement in revenue continues to point to significant cost savings over the period.
Unity Bank closed the half-year trading with total assets of N547 billion consisting mainly of loans and advances of N247 billion, investment securities of N122 billion and cash balances of N110 billion.
Source: insidebusiness.ng
