Unity Bank Suffers ₦62.6 Billion Loss in 2023

Unity Bank has reported a massive loss of ₦62.6 billion for the financial year ending December 31, 2023, marking a sharp contrast to the ₦941 million profit it recorded in 2022. This significant downturn highlights the bank’s ongoing financial struggles and raises questions about its future stability. The Unity Bank ₦62.6 billion loss is one of the largest recorded by a Nigerian bank in recent years, underscoring the challenges it faces in a tough economic environment.

The bank’s financial report for 2023 was delayed until 2025 due to regulatory hurdles and complexities arising from its merger with Providus Bank in August 2024. This merger was widely seen as a lifeline for Unity Bank, which has been grappling with financial instability for years. Despite the merger, Unity Bank’s performance in 2023 remained deeply troubling.

While Unity Bank’s gross earnings slightly increased to ₦59.36 billion in 2023 from ₦57.15 billion in 2022, these gains were overshadowed by rising operational costs and heavy impairment charges tied to non-performing loans. The losses translated to a negative earnings per share of 535.85 kobo, reflecting the severity of the situation. The Unity Bank 2023 loss is further highlighted by its dire balance sheet, where total liabilities of ₦845.6 billion far exceeded total assets of ₦518.7 billion, leaving a deficit of ₦326.9 billion.

This imbalance resulted in a negative capital adequacy ratio (CAR) of -76.14%, far below the Central Bank of Nigeria’s (CBN) minimum requirement of 10% for national banks. KPMG, the bank’s auditor, expressed serious concerns about its ability to continue operations without significant recapitalization. The audit report emphasized that Unity Bank’s negative equity position and failure to meet regulatory capital requirements cast doubt on its long-term viability.

To address these challenges, Unity Bank has announced plans to raise fresh capital to meet the CBN’s ₦200 billion recapitalization threshold for national banks by 2026. The bank is exploring various options, including private placements, rights issues, public offers, and potential mergers or acquisitions. However, analysts warn that investor confidence may remain low until tangible progress is made in resolving its capital shortfall.

In an effort to stabilize operations, Unity Bank disclosed that it received significant financial support from the CBN. This includes a ₦50 billion short-term financial accommodation to boost working capital and another ₦700 billion facility approved in July 2024 to facilitate its merger with Providus Bank. These interventions highlight the critical role of the CBN in keeping Unity Bank afloat.

Despite these measures, Unity Bank continues to face significant hurdles. Analysts point out that its survival depends on securing substantial new capital and restructuring its loan portfolio. The Asset Management Corporation of Nigeria (AMCON), which holds a 34.22% stake in the bank, is expected to play a key role in any recapitalization efforts.

The Unity Bank loses ₦62.6 billion story also underscores broader challenges within Nigeria’s banking sector. Unlike many of its peers who benefited from foreign exchange gains during the naira devaluation in 2023, Unity Bank suffered heavy losses due to its exposure to foreign currency loans. These forex-related losses contributed significantly to its poor performance.

The Providus-Unity merger was seen as a strategic move to combine Providus’ digital expertise with Unity’s extensive branch network and strong presence in northern Nigeria’s agricultural sector. However, it remains unclear whether this partnership will be enough to turn around Unity Bank’s fortunes.

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