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Additional capital boosts Unity Bank’s growth plan

By BusinessNews Staff on October 28, 2014

The conclusion of Unity Bank’s rights issue and special placement, which saw the bank raise more than N39bn additional capital have put the bank in a position to pursue its growth strategy, our correspondent has gathered.

Unity Bank plc had in May concluded arrangements to raise N39.2bn via Rights Issue of 38,446,689,710 ordinary shares of 50 kobo each at 50 kobo per share; and Private Placement of 40 billion ordinary shares of 50 kobo each at N0.50 kobo per share.

The Managing Director and Chief Executive Officer, Unity Bank, Mr. James Semenitari, had explained earlier in the year that although the bank had overcome several challenges, which limited its performance in the past, it still needed to strengthen its operations for sustained growth, hence the need for additional capital.

The Chairman, Unity Bank, BarauDanbatta, expressed a similar view when had said at the completion board meeting of the offer that, “The more fundamental is the underlying changes we are making in the bank.

“A complete restructuring is going on. Considering where we are coming from and the challenging environment, the bank is ready to run in terms of corporate governance structure and management expertise.”

The goal, according to Semenitari was for Unity Bank to become one of the top five banks in the country.

He said, “In the next three years, we believe that we will be first, a dividend-paying institution… In three years, we should have achieved at least 70 per cent of our dream of being the retail bank of choice. It is a six-year horizon, we said 2020.”

The goal was boosted on Wednesday when the Nigerian Stock Exchange listed additional 78.446 billion ordinary shares (of 50 kobo)of the bank for trading on the Exchange, following the completion of the offer.

A delighted Semenitari said the offer was oversubscribed by N950m, a development he explained reflected the optimism of the shareholders.

With the bank’s shares now in excess of 100 billion, he said, it would opt for share reconstruction in the future after getting the approval of the shareholders.

“Considering the number of shares on issue in the market that (share reconstruction) will definitely be done in the interest of shareholders,” he said.

Semenitari, who was appointed MD/CEO of the bank this year, explained that the bank was now on track for growth, thanks to changes effected by the board and management and the shareholders’ support.

This, he added, is reflected in its financial performance this year.

In the half-year period ended June 30, 2014, Unity Bank’sprofit before tax advanced by 81 per cent to N7.898bn from N4.356bn, while profit after tax rose by 92 per cent to N7.108bn from N3.702bn.It gross earnings rose to N30.851bn from N30.174bn in the first half of 2013.

Operational efficiency as measured by the cost-to-income ratio stood at 62 per cent – down from 66 per cent in Q1 2014 and 120 per cent in full-year 2013.

This was attributed to a reduction of operational expenses. For example ‘other expenses’ was reduced by 13 per cent, personnel expenses was cut by 7.9 per cent, while total expenses declined by 10 per cent.

Semenitari explained that the bank’s strategy involves leveraging a strong network across the country, the strong personalities that make up the board of directors as well as the quality of manpower that exists. He said the bank was also targeting small and medium-sized business.

He added that the bank’s strategy also involves focusing on agriculture and the rural economy.

He said, “By rural economy, we mean leveraging our presence historically that was modelled around urban-rural drift. The essence of taking the economy to the last tiers of governance is to bridge the urban-rural economy.

“Today, Nigerian SMEs are the ones driving large businesses. So, if you want to leverage the local market, which is what grows the GDP, our people are driving first-class businesses offshore for foreign economies with requisite skills.”

[Punch]

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