Lucky Fiakpa
5 November 2007
Lagos — The board of directors of Union Bank of Nigeria Plc is expected to declare about N17.4 billion profit at the bank's annual general meeting scheduled for November 28, 2007 in Abuja, Nigeria federal capital.
This figure which was made known exclusively to THISDAY over the weekend by the Group Managing Director of the bank, Mr. Barth Ebong, represents 28.9 per cent increase over N13.5 billion declared the previous year.
The directors are also expected to declare total dividend of about N9 billion, which should translate to N1.00 per share exactly the same amount paid as dividend last year.
The bank is also capitalizing some of its reserves to give a bonus issue of one new ordinary share of 50 kobo each for every five held as at the close of the bank's financial year. This is an improvement over that of last year of one new share of 50 kobo each for every ten shares held.
The bank's decision to give a bonus issue and pay dividend to shareholders, the group managing director said, is informed by its good fortune, especially the excellent and positive growth in its financial performance this year. This implies 20 per cent instant growth in the number of shares accruing to the bank's shareholders.
Union Bank could have done even better but for its bold decision to write off the entire goodwill costs arising from its acquisition of some legacy financial institutions during the banking consolidation exercise.
Profit before provision for risk assets actually rose by 41.61 per cent from N18.29 billion posted the previous year to N25.90 billion but the huge provision for the goodwill liability, dragged the profit level down to N17.4 billion. The bank is expected to write off about N9 billion as good will this year.
"We decided to bite the bullet this year by writing off the entire goodwill arising from the acquisition of the four legacy financial institutions during the banking consolidation exercise. Last year, we did not provide for them. But this year we decided to write them off and clear our books of all such liabilities," Ebong said.
The banks acquired by Union Bank include Union Merchant Bank, Broad Bank, Universal Trust Bank and MBC International Bank during the consolidation exercise but failed to provide for the associated goodwill arising from the acquisition in its last financial reports.
That notwithstanding, this must be one result the board of directors would be eager to present to the general meeting of shareholders. The commendable performance of the bank, Ebong said, can largely be attributed to the overwhelming support the management and staff received from stakeholders as well as the professionalism of its team.
In spite of the immensely competitive operating environment, the bank's financial scorecard lends credence to its continued claim of being a strong and reliable bank. The bank generated gross earnings of N88.09 billion; a 32.31 per cent growth from N66.58 billion earned in the corresponding period last year.
Total deposit rose by N111.12 billion, from N320.96 billion in the year ended March 31, 2006 to N432.08 billion in the review period while total asset increased by 4.71 per cent from N667.77 billion to N699.25 billion.
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