Unity Bank daily activities were shut down by aggrieved customers who lost over N134 million investment funds, ENigeria Newspaper reports.
On Monday, civil servants in Ogun stormed a Unity Bank Plc branch in Abeokuta, led by the embattled Tomi Somefun, to protest the alleged diversion of their N134 million investment fund.
The bank’s dubious and fraudulent operations, which the Managing Director, Tomi Somefun, has been unable to address, have also been chastised by the dissatisfied consumers.
The workers marched to the Ita-Eko branch of Unity Bank under the auspices of the Association of Senior Civil Servants of Nigeria, Ogun State, to air their grievances.
The outraged senior civil workers held signs that said, “Funds Not Safe In Unity Bank,” “Unity Bank Stole Our Money,” and “No Refund, No Retreat, No Surrender.”
Speaking on behalf of the association, the State Chairman, Comrade Olude Isa Owolabi, members had instructed the bank to transfer their investments into another bank account, saying however, that sent a lesser amount of what it was told to move into another account.
“We received an emergency call sometime last year that Unity Bank, Abeokuta branch was cheating clients, and because we are a proactive union, we rose to the situation and asked the lender to transfer money from our Investment account to another account.
“Unfortunately, Unity Bank sent a smaller amount than we expected, leaving us with a substantial balance in our account.
“We’ve had many interactions with them, we’ve called them, we’ve written several letters, at least six or seven, and they have not responded.
“The bank’s managing director should be questioned about the scam.”
“The problem started in February of this year, and they have yet to repay our money to us. We can’t keep waiting for Unity Bank to become free.
They’ve admitted that they took advantage of us. In our office, we have records to prove it. They acknowledged that the funds are available and that they will be transferred as soon as feasible.
We haven’t heard anything from them since then,” he said.
According to Owolabi, the association’s investment money was N134 million, with N80 million remitted to the organization and a balance of around N54 million.
A bank official, who did not want to be identified because he was not authorized to speak on the topic, responded by saying that the bank had never refused the association access to their funds.
“The problem is already with the Central Bank of Nigeria (CBN),” he said.
The person went on to say that until the CBN completes its inquiry, the bank will not be able to make any more transfers as requested by the association.
In an earlier report ENigeria Newspaper exposed Unity Bank’s liquidity crisis from way back
Unity Bank’s LDR ratio rose by 40.37 per cent in 2019 from 17.8 per cent in 2018, however, this was 25 per cent below the CBN’s statutory ratio of 65 per cent advised to banks in Q4 2019.
A perusal of the bank’s financials for 2019 revealed that the growth in its loans to customers was not matched by a corresponding growth in deposits received from customers.
The bank’s loans to customers increased by 135.93 per cent while its deposit from customers increased by 40.63 per cent. The disparity between the growth of loans to customers and deposits from customers raises the question of how Unity Bank was able to increase lending against slow growth in deposits.
The bank’s books suggested that lending in 2019 was financed increasingly by a rise in borrowings. The bank’s borrowings increased by 45.23 per cent between 2018 and 2019, as borrowings rose from N126.21 billion in 2018 to N183.3 billion in 2019.
The bank’s asset quality improved noticeably in 2019 as it sold off the bulk of its toxic assets and cleared up its loan book to allow for a fresh start. Its impairment losses on financial assets declined to N1.92 billion in FYE 2019 from N5.96 billion in FYE 2018.
Though loans to customers rose from N44.1 billion in 2018 to N104.02 billion in 2019, the loan growth was largely intervention loans for Anchors Borrowers’ Programmes (ABP) of the CBN, as its deposits from customers did not record any significant increase between 2018 and 2019.
Unity Bank Crisis Evident in FY 2020 PERFORMANCE another ENigeria Newspaper expose
Unity Bank 2020 financial results showed that the lender has not recovered as its profit plunged again over credit and revaluation loss.
The lender’s profit dropped 38 per cent to N2.08 billion compared to N3.38 billion a year before.
The report of the independent auditors for Unity Bank, KPMG Professional Services, showed that as at December 31, 2020, the total liabilities of the bank “exceeded its total assets by N275 billion and the bank did not meet the required minimum Capital Adequacy Ratio (CAR) of 10 per cent and the minimum capital requirement of N10 billion for a national bank as required by the Central Bank of Nigeria (CBN).”
From the analysis of the results, the total assets of the lender stood at N492.0 billion in the period under review, while the total assets stood at N767.4 billion, with the CAR at -101.29 per cent. These indicators are worrying.
Earnings per share fell 38 per cent to 17.8 kobo per share from 28.9 kobo per share the previous year.
Personnel expenses rose by 10 per cent to N10.4 billion compared to N9.4 billion in 2019, while depreciation of property and equipment dropped to N1.69 billion compared to N1.7 billion in the same period of 2019.
The bank paid N22.1 billion income tax in 2020, a 38 per cent decline compared to N 36.2 billion paid the year before.
There are concerns among shareholders of the lender that there may not be time to achieve these lofty goals as last year, the bank had to receive a N50 billion short term loan from the CBN to meet working capital requirements and this credit facility is expected to mature on September 19, 2021. This loan and others have increased the debt of the financial institution.
A critical look at the financial statements in 2020 showed that Unity Bank is no longer enjoying the patronage of individual and government depositors, except for corporate depositors.
Last year, the deposits from the government reduced to N27.1 billion from N30.9 billion, while the deposits from individuals dropped to N99.1 billion from N123.0 billion.
Only deposits from corporate organizations rose to N230.4 billion from N103.8 billion and this contributed to the increase in the customer deposits of Unity Bank in the year to N356.6 billion from N257.7 billion in 2019.
In the year, Unity Bank said its profit before tax dropped to N2.2 billion from N3.6 billion, while the profit after tax went down to N2.1 billion from N3.4 billion.
Unity Bank Crisis became even more obvious Q1 – 2021 PERFORMANCE ANSWERS AGAIN
Unity Bank’s financial statement for Q1 2021 showed that the lender’s total liabilities of N801.98 billion exceeded its total assets of N521.48 billion by 35 per cent, due to protracted loss history.
In the first three months of this year, it had a retained loss of N371.95 billion, which dragged total equity further down by 2 per cent to a loss of N280.50 billion.
A retained loss is a loss incurred by a business, which is recorded within the retained earnings account in the equity section of its balance sheet.
In the last five years, Unity Bank has been putting up a seesaw performance, recording two consecutive losses in 2017 and 2018, before recovering in 2019 with N28.94 billion post-tax profit.
However, its profit dipped by 38.33 per cent to N2.09 billion in 2020 from N3.38 million it posted in the previous year.
More so, customers were also wary of the safety of their money in Unity Bank, causing its deposits to decline in the first three months of 2021.
The bank customers’ deposits dipped by 2 per cent to N348.34 billion in Q1 2021 instead of N356.62 billion garnered in the prior period last year.
Even fellow lenders cut their deposits in Unity Bank by one per cent to N105.37 billion compared with N106.70 billion in Q1 2020.
Also worrisome was that most of the income lines of the second-tier lender went down during the period under review.
The total revenue dipped by 3 per cent to N11.45 billion, undermined by fee and commission income which decreased by 14 per cent to N1.60 billion (Q1 2020: N1.86 billion) and a net trading loss of N53.48 million recorded as of March instead of N327.87 million it made in the period last year.
However, interest income grew marginally by one per cent to N9.67 billion from N9.61 billion in Q1 2020.
Unity Bank performance in the first three months of this year would have been woeful if not for the other operating income, which was up by a whopping 317 per cent to N233.96 million, lifted specifically by transaction income that rose by 175 per cent during the period.
Its performance was also bolstered by the N65.89 million loan recovery it made against the N429.67 million provision it had to set aside for toxic assets in Q1 2020.
This was the impetus that propelled the lender’s pre-tax profit to rise by 43 per cent to N784.28 million and post-tax profit to uptick by 43 per cent to N721.54 million.
Meanwhile, it was able to cut interest expenses by 11 per cent to N4.86 billion compared with N4.86 billion the bank expended for the same purpose in Q1 2020, but personnel cost rose marginally by one per cent to N2.68 billion.
Unity Bank commenced operations in January 2006 following the merger of nine banks with competencies in investment, corporate and retail banking.