Unity Bank de-risks balance sheet

Unity Bank of Nigeria Plc has announced a total derisking of its balance sheet, ridding the bank of toxic legacy assets and paving the way for significantly improved return on shareholder value in the coming years.

Already, signs of a return to improved performance was evident in the third quarter, 2018 result of the bank which showed a profitability of N644 million.

Derisking is an accounting terms that means the reduction of all risks that present threats to the growth of companies.

According to the 2017 annual report of the bank, made available to the Nigerian Stock Exchange (NSE), Unity Bank has successfully written of a total of N16 billion, being Goodwill that arose from legacy merger issues. This one-off derisking strategy that has cleaned up the bank’s books impacted the bottomline leading to a net loss of N14.2 billion.

The report also showed the ratio of non-performing loans standing at zero percent, a clear indication of the management’s excellent risk assessment for the period. The report also indicated a marginal Loan-to-Deposit Ratio of 3.6 percent, pointing towards a significant room for growth and the attendant income boost.

Presenting the Facts-Behind-the-Figures, the bank said although financial performance declined in 2017, as the Bank took the bold action to tackle the lingering effects of legacy problems, the new Board & Management of the Bank took firm and strategic action in a bid to eliminate the drag on the bank in the form of huge legacy non-performing loans, an inefficient operating structure which manifested in excessive costs, poor branch spread and inadequate application of technology amongst others.

These strategic initiatives, amongst others, the report continued, are geared towards a complete transformation of the bank and setting it on the path of strong and sustainable growth and profitability.

“The courageous action taken by the Bank towards cleaning up the observed issues thus resulted in a negative capital base but also gave birth to a leaner, smarter and dynamic Bank with a healthy Balance Sheet,” the report stated.

To sustain the new momentum and return the bank to one of the best performing in the Nigerian market, the bank said it has been making significant progress in its ongoing capital raising exercise.