Unity Bank Plc has recently announced a substantial loss of N62.64 billion for the fiscal year 2023, highlighting the bank’s challenges amidst economic uncertainty and volatility. This financial performance reflects the bank’s struggle with negative shareholders’ funds, high domestic interest rates, and fluctuations in the foreign exchange market.

Financial performance overview

The bank’s audited financial results for 2023 show a 3.87 per cent increase in gross earnings to N59.36 billion, primarily driven by elevated lending rates. However, despite this increase, significant expenses and foreign exchange losses severely impacted the bank’s profitability. The net interest income stood at N17.54 billion, which was overshadowed by a net trading loss of N50.07 billion and an N1.70 billion Expected Credit Loss (ECL) allowance charge.

Unity Bank’s total assets decreased by 7.36 per cent to N472.58 billion due to lower loans and cash balances with the Central Bank of Nigeria (CBN). On a positive note, customer deposits rose by 23.08 per cent to N402.99 billion, up from N327.43 billion in the previous year. The bank’s negative profitability affected most financial ratios, except for the loan-to-deposit and loan-to-assets ratios, which met regulatory requirements. The net interest margin improved to 4.95 per cent in FY 2023 from 4.81 per cent in FY 2022.

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Strategic recovery efforts

Despite the financial challenges, Unity Bank is focusing on strategic recovery efforts. The bank is working on recapitalisation plans to strengthen its equity capital, reduce the cost of funds, improve the cost-to-income ratio, and increase gross revenue. New investors and investment funds are being arranged to support these efforts.

In the first half of 2023, Unity Bank reported a marginal increase in deposits to N333.38 billion, reflecting its commitment to expanding its retail footprint. The bank also saw a 17 per cent growth in foreign exchange trading income and a 10 per cent increase in fees and commission income, driven by its digital banking platforms. 

Managing Director/CEO, Mrs Tomi Somefun, noted that despite market disruptions, the bank remains optimistic about government policy initiatives and is focused on ramping up asset creation and liability generation.

Unity Bank’s financial performance highlights the need for robust strategies to navigate economic challenges. The bank’s efforts to diversify earnings and enhance retail growth are crucial steps towards stabilising its financial position. As the bank progresses with its recapitalisation program, it aims to improve its operational efficiency and expand its market presence in Nigeria.