Union Bank sees 138% profit growth in 2023 amid ongoing restructuring.

Union Bank sees 138% profit growth in 2023 amid ongoing restructuring.

Union Bank of Nigeria, Nigeria’s second-oldest bank, reported a pre-tax profit of N71.8 billion for the fiscal year 2023, up 138% from N30.2 billion in FY 2022.

This is as the bank continues its restructuring plans following the review of its Titan Trust Bank takeover by the central bank under Yemi Cardoso.

Reports suggest the bank is considering potential investments from strategic investors in line with the central bank’s recapitalization plans. Nairametrics understands the consolidation with Tital Trust Bank is still awaiting CBN and SEC approval.

Earnings growth
The bank generated gross earnings of N393.6 billion during the period, marking an 89% growth from the N208 billion posted in FY 2022.

During the full year, the bank generated a net interest income of N90.4 billion, marking a 53% improvement from the N59.1 billion generated in 2022.

However, there was a jump in net impairment charges, from N4.5 billion as of FY 2022 to N58.5 billion as of FY 2023, thus leading to 42% decline in the bank’s net interest income after impairment losses.

Key Highlights: FY 2023 vs FY 2022
Gross Earnings: N393.6 billion, +89% YoY
Interest Revenue: N249.4 billion, +69% YoY
Interest expense: N65.8 billion, +47% YoY
Net interest income: N90.4 billion, +53% YoY
Impairment charges: N58.5 billion, +1208% YoY
Net fee and commission income: N17.7 billion, +39% YoY
Net trading income: N118.3 billion, +402% YoY
Net non-interest income: N138.0 billion, +150% YoY
Operating income: N169.8 billion, +55% YoY
Total expenses: N98 billion, +23% YoY
Profit before tax: N71.8 billion, +138% YoY
Profit after tax: N65.9 billion, +127% YoY
Total assets: N4.23 trillion, +52% YoY
Loans and advances to customers: N1.48 trillion, +53% YoY
Customer deposits: N2.34 trillion, +58% YoY
According to the financial statements, the group posted a net FX revaluation loss of N226 billion, which could exempt it from the 70% windfall tax on realized net FX gains.

Despite the net FX loss, the bank recorded an N118.3 billion net trading income during the year, a 402% increase from the N23.6 billion trading gain recorded in FY 2022.
Union Bank also recorded a net income of N215.9 billion from its financial instruments, marking a 3242% increase from the N6.46 billion recorded in 2022.
What you should know
Over the past few years, the ownership of Union Bank has been mired in controversy, with Titan Trust Bank at the center of the drama.

After announcing a 100% takeover of the bank, effectively leading to the delisting of the bank from the NGX in 2022, the CBN called into question the legality of the deal.
In December 2023, the report from the special investigation into the activities of the Central Bank of Nigeria under Godwin Emefiele indicted the acquisition process of Union Bank by Titan Trust Bank.
Titan Trust Bank refuted the narrative of the Obazee investigation; however, in January 2024, the board of Union Bank put the takeover of the bank into limbo. However, since Union Bank is no longer a quoted company on the NGX, there has been little insight into the bank’s corporate actions since 2022.
With a paid-up share capital of N148.1 billion, the bank needs to increase its capital base by at least N51.9 billion to meet the N200 billion minimum capital requirement for a national banking license.