VENTURES AFRICA – Union Bank, one of Nigeria’s leading financial institutions, recently announced a completion of its recovery phase, making public news that it had returned to profitability, after a stint in the growth wilderness. This year, its half year (H1) financial results further confirmed a desire to consolidate its position among the leading lenders within Africa’s largest economy.

This bank recorded a profit after tax of N6.3 billion ($39 million), a tremendous feat given its dwindling fortunes just a couple of years ago.

Ventures Africa caught up with Oyinkan Adewale, an Executive Director and Chief Financial Officer (CFO), Union Bank of Nigeria, who offered perspective on the bank’s new found strategy, returning to profitability and sustaining a growth path.



The highlight of your report stated an improved profit, but figures showed a decline in profit from 2013. Was this confusion in reporting?

Due to some one-offs during H1 2013 in two specific areas: on the interest income line and the operating expenses line which added over N5billion to the core performance of H1 2013. Therefore if you compare the adjusted H1 2013 (i.e removing the one-offs) there isn’t a decline.

Also In line with our transformation agenda, we have made significant investments in the first half of this year. We have upgraded our IT infrastructure including a major investment in fibre optics for our branches nationwide, and have made some key hires necessary for achieving our growth plans. It is also worth noting that Union Bank has hired consultants to assist us in designing our transformation plan.

These transformation related investments had some impact on our PBT in H1 2014. If we look at our earnings trajectory quarter on quarter, we are confident in our underlying core performance and beginning to see the impact of our transformation initiatives delivering a sustainable base for long term profitability, which is a key objective for Union Bank.



You listed the oil and gas sector as a key beneficiary of your increased loan portfolio. Is this a deliberate focus?

Union Bank takes a conservative approach when it comes to loan growth and we have a clear strategy to grow our loan portfolio. Our focus is on sectors where we see growth and new opportunities. Those include Oil & gas, Manufacturing, Agriculture etc.



What other sectors top Union bank’s investment priorities?

We are also focusing on areas such as manufacturing, Small and Medium Enterprises (SMEs) and retail. We have completed the segmentation of our business which allows us to focus on these areas meaning the Bank is now run along the lines of Corporate, Commercial, Retail.



Do you have any predictions for Union bank’s potential profit results for 2014 year- end?

H2 2014 will show a stronger PBT number than H1 2014. This is because the Bank’s transformation initiatives are continuing to yield results, the sales of the our subsidiaries, would have been largely concluded and above all, expenses rationalisation initiatives would be getting more mature and yielding fruit across the network.

We also have an active programme of lowering our cost of funds – which goes directly to the bottom line.

The success of all these will impact our bottom line and profitability.



http://www.ventures-africa.com/2014/08/union-bank-to-see-stronger-year-end-profit-cfo/