Unity Bank In A Messy Financial Turbulence, Records Whopping N38.9 Billion Loss
Unity Bank is facing significant financial challenges, as it reported a substantial net loss of N38.9 billion for the first half of the year. This stands in stark contrast to the N1.7 billion net profit it recorded just a year earlier. The bank’s financial troubles were exacerbated by a foreign exchange revaluation loss of N35.4 billion for the period, compared to a much smaller loss of N16.2 million the previous year.
The bank’s CEO, Tomi Somefun, attributed the negative financial performance to the prevailing foreign exchange revaluation in the financial system. She mentioned that the bank had injected N135 billion to improve its negative shareholders’ fund, which had moderated from (-ve) N275 billion at the end of December 2022 to (-ve) N178 billion as of the end of June 2023, after accounting for the FX revaluation loss.
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To address the negative balance, the bank drew N135.2 billion from its other reserves in the form of convertible debentures, reducing the shareholders’ fund deficit by 35 percent. While the bank’s revenue for the period showed a slight increase, its net interest income fell by 23 percent to N7.9 billion due to weakened interest income and increased interest expenses. Operating expenses also rose by 16 percent to N15.3 billion, driven by higher personnel expenses.
Additionally, Unity Bank’s balance sheet revealed a concerning aspect, with total liabilities of N688.8 billion exceeding its total assets by 35.1 percent. CEO Tomi Somefun indicated that the bank is working on completing its recapitalization program soon to regain stability and competitiveness in the market.
This financial turbulence at Unity Bank is noteworthy, especially amidst a banking boom in Nigeria driven by a sharp depreciation of the Naira. The bank’s ability to weather these challenges and implement a successful recapitalization plan will be closely watched in the coming months.
