Unity Bank, running on borrowed funds

By Odunewu Segun

Unity Bank, one of Nigeria’s tier 2 commercial banks may be running on borrowed funds following its precarious financial situation and the huge debt it carries, National Daily has gathered.

And the due to the influence wielded by the Asset Management Corporation of Nigeria (AMCON) who is the majority shareholder with 34%, the Central Bank of Nigeria may be unwilling to order a management reshuffle of the bank as it did with Skye bank.

The bank’s total indebtedness stood at N50 billion in 2016, and an additional N2bn was lent to the bank in the first half of 2017, bringing the total debt to N52bn.

According to findings by National Daily, as at December 2017, a total of N23 billion was held as loans by past and present directors. This same group also has a high proportion of non -performing loans. 

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Non performing insider loans amounted to N15.3 billion as at December 2016. Current chairman of the bank Thomas Etuh has non-performing loans amounting to almost N4.5 billion.

Though the bank has N86.5 billion worth of shareholder funds as at Dec 2016, the bulk of the funds are from a share reconstruction carried out in 2016, and as such may merely exist on paper.

Compare with competitors, its half year results for 2017 was the lowest. While Unity Bank made a gross income of N42 billion and a profit before tax of N2.3 billion, Diamond bank had a gross income of N62 billion and a Profit Before tax of N10.7 billion. FCMB had gross earnings of N77.5 billion and a profit before tax of N3.0 billion.

Unity bank shares closed at 56 kobo on Wednesday, 6th of September, but year to date, the stock is up almost 2% lagging behind virtually all other banking stocks in terms of price appreciation.  Diamond bank is up 36% year to date, while Skye bank is up 26% year to date.

Unity bank was founded in 2006 from the merger of 9 commercial banks  namely; Intercity Bank Plc, First Interstate Bank Plc, Tropical Commercial Bank Plc, Pacific Bank Limited, Centre Point Bank Plc, Societe Bancaire Limited, NNB International Bank Plc, Bank of the North Ltd and New Africa Bank Plc. This is following the consolidation exercise mandated by the Central Bank of Nigeria (CBN) in 2004.