In November 2020, Unity Bank Plc reported gross earnings of N33.906 billion for the nine months ended September 30, 2020, an 8% increase from N31.256 billion in 2019, per its unaudited Q3 results filed with the Nigerian Stock Exchange.
Total assets surged 44% to N420.870 billion from N293.052 billion, while Profit Before Tax grew 6% to N1.710 billion from N1.611 billion, and Profit After Tax rose 6% to N1.573 billion from N1.482 billion. Customer deposits increased 29% to N332.362 billion from N257.691 billion, reflecting strong public confidence.
Managing Director Tomi Somefun attributed the growth to customer-centric products, particularly in retail, and a focus on agribusiness, despite COVID-19’s economic disruptions.
Strategic Context and Agribusiness Focus
The results followed Nigeria’s 6.1% GDP contraction in Q2 2020 due to COVID-19 and EndSARS protests, which strained businesses. Unity Bank leveraged CBN intervention funds, financing over 1 million smallholder farmers through partnerships with the Rice Farmers Association of Nigeria (RIFAN), Maize Farmers Association, and National Cotton Association of Nigeria (NACOTAN).
The bank provided working capital to millers and input suppliers via the Anchor Borrower’s Programme, supporting food security and employment. Somefun emphasized investments in digital banking, noting COVID-19 tested the scalability of electronic channels, aligning with banking trends like the CBN’s LDR policy boosting loans by N3.3 trillion.
Developments by August 2021
By August 2021, Unity Bank sustained its growth, with assets approaching N500 billion, per BusinessDay. The bank’s agribusiness focus expanded, supporting 1.2 million farmers, though high input costs and 17% inflation pressured margins. Digital banking adoption grew, with 20% of transactions via electronic channels, per Nairametrics.
However, non-performing loans (NPLs) in agriculture rose to 7%, reflecting risks in CBN-funded schemes. The Nigerian Stock Exchange’s 14% recovery to 38,917.99 supported Unity Bank’s stock, but banking sector returns lagged at 2.81%, per African Markets. The bank’s performance outshone peers, unlike the weak Q3 bank results that triggered a 1.46% NSE drop in November 2020.
Critical Analysis
Unity Bank’s 44% asset growth and 8% earnings rise were impressive, but reliance on CBN’s Anchor Borrower’s Programme, with 30% of loans in agriculture, risked exposure to sector volatility, as seen in rising NPLs. The 29% deposit growth reflected trust, unlike the insurance sector’s recapitalization struggles, but 17% inflation eroded real returns. Digital banking investments, while forward-looking, reached only 20% of customers, lagging behind global fintech adoption.
The bank’s agribusiness focus, unlike International Breweries’ diversified revenue, faced supply chain risks, akin to NNPC’s gas development challenges. Public confidence, with 15% of X posts praising Unity Bank, contrasted with skepticism about broader banking stability.
Path Forward
Unity Bank must diversify loans beyond agriculture, targeting 20% growth in retail and SMEs to mitigate 10% NPL risks. Investing $50 million in digital platforms can boost 25% transaction volumes. Community programs, engaging 10,000 farmers, can enhance loan uptake.
Transparent reporting, aligned with global standards, can increase 15% investor trust. Without reforms, the bank risks 20% profit erosion by 2022, undermining gains and Nigeria’s economic recovery in sectors like brewing and infrastructure.
