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By Dike Onwuamaeze
Union Bank of Nigeria Plc (UBN) has mapped out a strategy to re-establish itself as one of the foremost banking institutions in Nigeria. Part of the strategy, which was approved by its shareholders during bank’s 47th Annual General Meeting (AGM) on June 17, 2014. During the AGM the board was mandated “to take all necessary steps to raise medium term funding by the issuance of debt instrument(s), tenured bonds(s) and/or Tier II Securities or a combination of these financing options, up to a maximum of US$ 750 million (seven hundred and fifty million US Dollars), or its equivalent in any currency, or such terms as may be determined by the Board.
Other approvals granted during the AGM to realize the objective of taking the bank to the top include the setting aside of, subject to regulatory approval, “up to 570,693,750 ordinary shares from the company`s unissued ordinary shares which represents three percent of the company authorized share capital of 19,023,125,000 ordinary shares to fund an employee share incentive programme,” as well as “taking necessary steps to reduce the balance on the company’s share premium account by N286, 982,000,000; to be applied to the negative Retained Earnings of N272, 064,000 as at 31 December, 2013 for the purpose of reducing same to zero (0) and to facilitate the Asset Management Corporation of Nigeria`s claw back of the Excess Capital of N14,918,000,000 arising from the injection of the Financial Accommodation Amount of N305,700,000,000.”
According to Mr. Emeka Emuwa, group managing director of UBN, the bank’s “focus will be on executing key elements of our strategy which we believe will yield immediate results.” He told the AGM that the bank’s main priority in 2013 was to improve its efficiency by addressing operational challenges and implementing cost optimization initiatives. The second priority was to develop a medium term strategy which clearly outlines a roadmap to realizing our ambition to be a highly respected provider of quality banking services. “I am pleased to say that we made considerable progress on both fronts in 2013,” Emuwa said.
The results of 2013 indicate a modest improvement over 2012. Gross earnings for the Group and Bank increased by 4 percent and 7 percent to N121 billion and N103 billion, respectively. Operating expenses declined by 18 percent for the group and 20 percent for the bank to N60 billion and N57 billion respectively. The bank, in furtherance of its ongoing transformation programme took one-time provisions for restructuring costs, which totaled approximately N11 billion.
Despite this, the UBN maintained its profitability streak. The group’s profit before tax (PBT) increased by 31 percent to N3.8 billion while the bank’s PBT grew by 22 percent to N4.2 billion from N3.4 billion in 2012. Also, the group’s and bank’s total assets at the end of 2013 were N1, 003 billion and N882 billion respectively. Union Bank recorded strong growth in its loan portfolio, which grew by 55 percent from N149 billion in 2012 to N231 billion in 2013.
The 2013 full year results and the transformation strategy were endorsed during the AGM by shareholders of the bank. Addressing shareholders during the AGM, Senator Udoma Udo Udoma, chairman of UBN Plc’s Board of Directors, said that in December 2013, Union Bank finalized its three year strategy, which provides a clear direction for our future growth, in line with the ongoing transformation program. “Union Bank aspires to be a highly respected provider of quality banking services, and to achieve this, the Bank has identified six core areas which are pivotal to its success- the quality of our customer experience, the quality of our client base, the quality of our talent, the quality of our banking platform, our professional standards, and the quality of our earnings,” he said.
With respect to the divestment of Union Bank’s non-banking portfolio companies (with the exception of Union Bank (UK) plc) in compliance with the Central Bank of Nigeria`s Regulation on the Scope of Banking Activities and Ancillary Matters, Mr. Emuwa observed that “these divestments will also enable us to focus on our core banking priorities and further consolidate our efforts to regain our position as a leading commercial bank in Nigeria.”
Emuwa said in a press statement issued before the AGM that the bank is repositioning its business to reflect a more balanced retail, commercial and corporate banking model to enable it make a significant contributions to financial inclusion in Nigeria. This would see more than 60 branches in prioritized locations either being refitted, relocated or upgraded to serve customers adequately in those areas. “As the bank looks to expand its customer base, we will continue to roll out our Bank of The Future branches, which will rely on technology and innovation to simplify the banking experience for our customers. We plan to double our ATM footprint and enhance our mobile banking platforms while significantly upgrading our use of technology to enhance our customer experience at all touch points.”
Union Bank of Nigeria Plc is a household name and one of Nigeria’s long-standing and most respected financial institutions. The Bank is a trusted and recognisable brand, with an extensive network of over 350 branches across Nigeria. It was established in 1917 and got listed in the Nigerian Stock Exchange in 1971.
A new board of directors and executive management team were appointed to Union Bank in 2012. It embarked upon a Transformation Programme in 2013, which was designed to re-establish it firmly as one of Nigeria’s leading financial institutions.