Q1 Result: At Last Union Bank Gets It Right?


Coming out its of its ‘old generation’ toga, Union Bank has taken series of steps and strategies to reposition itself as a bank for the current generation. Its 2016 Q1 result is an opportunity to make the first impression to its shareholders and the general public.

So here it is:

Union Bank’s profit after tax grew by 82%, NGN 4.7 billion in Q1 2016 compared to NGN 2.5 billion in Q1 2015. However, its total asset only increased by 4%- NGN 1,087 trillion in Q1 2016 compared to trillion NGN 1,047 trillion in Q1 2105.

**Excludes gain on sale of subsidiaries.  Source: Union Bank

The bank is also taking cautious steps from immersing the bank into debt. Its non-performing loans, NPLs is almost flat at 6.69% in Q1 2016 compared to 6.67% in Q1 2105 which is just a marginal percentage increase of +0.01%.

Emeka Emuwa, CEO, Union Bank. Source: Union Bank

Union Bank could not have achieved its positive results without a big shake up. The bank’s 30% shareholding was bought over by Atlas Mara Limited. Atlas Mara had added more value to the bank through the adoption of new banking solutions and technologies to re-position the bank  for efficiency. Atlas Mara was founded by Bob Diamond, former CEO of Barclays Bank and Ashish Thakkar, the CEO of Mara Group.

Bob Diamond, Chairman Atlas Mara. Source: theguardian.com

According to FT, Atlas Mara offloaded its 12.3% stake held in Ecobank Transnational Limited worth about USD 230 million to increase its stake in Union Bank from mere 9% to 30% for USD 270 million. It is however surprising that Diamond who was keen on investment banking and securities trading while at Barclays Bank UK, is championing retail banking at Union Bank.

This result has proven that Union Bank is more of a retail and commercial bank. The bank will be seeking to shore up its deposit and provide credit for trading activities. Its lack of appetite to give loans to high risk and high volume sectors might save it from ballooning its NPLs like it did in the past. However, if Union Bank wants to perform better in retail banking, it needs more product innovation and brand building strategies.


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