The Managing Director of Union Bank Plc, Mr. Emeka Emuwa, attributes the bank’s inability to pay dividends to its shareholders to technical reasons that are currently being addressed by the management. He spoke during the question and answer session of a recent Facts behind the Figures event of the Nigerian Stock Exchange. NGOZI AMUCHE was there. Excerpts:
Critics allege that your bank has refused to rebrand in order to meet up with modern banking. What is your take on this and what is your unique selling point?
Our bank is modern enough to compete with any new generation bank. At Union Bank, we have tailored solutions designed to help grow the operations of Small and Medium Enterprise business. These include easy access to finance for working capital, dedicated relationship manager, capacity building for businesses, access to markets and a conducive banking climate for investment. SME customers now have access to foreign exchange easily in any of our branches to purchase eligible imports. Our agriculture sector product is another key strength and focus for us, which we are passionate about. For instance, despite the decline in the nation’s Gross Domestic Product, our exposure to the agric sector recorded positive growth of over four per cent in 2016.
The renewed focus of the Nigerian government on reviving productivity in the sector also contributed to this growth. The new Agricultural Promotion Policy, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending and other Agric-financing arrangements, have given farmers and businesses new impetus and opportunities for growth. We have moved up and we will continue to build on our strength.
In 2015, your bank said it would not pay dividends to its shareholders anytime soon, owing to poor earnings. Two years on, investors have not earned returns on investment (dividend). When should investors expect a rebound on your earnings?
Union Bank is abiding by laws governing dividend payment in Nigeria. We cannot pay for now because of the technical and legal proceedings the bank is involved in. The reality is that as long as we continue to have negative earnings, there is absolutely nothing Union Bank of Nigeria can do about paying dividend to its shareholders.
Several operators of SMEs are not happy about what they describe as poor loan disbursement by commercial banks. What is your take on this?
Union Bank has a projection of driving its loan growth, increasing customers’ deposit, reducing cost-to-income ratio and improving return on equity. We are aiming at driving our loan growth between 10 and 15 per cent and growing deposit higher, through investment already made on channels and retail banking.
Some banks are presently struggling with loan default, including Union Bank. How do you intend to cope with this?
Environmental factors contributed to the non-performing loan growth in our book and the management is strategising on how those loans can be recovered. We are growing better and starting to have more predictable growth. We are more confident in managing costs and interest on costs that we have been carrying and also the foreign exchange volatility. The combined effect of regulatory changes and the depreciated naira impacted the quality of banks’ loan books, leading to capital pressures on banks to meet regulatory requirements. Our job as a bank is to acquire risk, deal with it and overcome it.
Union Bank is abiding by laws governing dividend payment in Nigeria. We cannot pay for now because of the technical and legal proceedings the bank is involved in. The reality is that as long as we continue to have negative earnings, there is absolutely nothing Union Bank of Nigeria can do about paying dividend to its shareholders
You said your bank would attain the Tier 1 position by 2018. What are you putting in place to measure up with other big banks in the same category?
The bank’s strong financial and operational performance continues to affirm our business strategy and success of our transformation. There is more work to be done against the backdrop of significant economic headwinds. However, we remain committed to delivering our business objectives and enhancing our competitive position in the industry.
As we consolidate on the multiple gains made last year in the form of revenue growth, portfolio expansion, process improvements, network development, our journey in the years ahead will be etched with greater emphasis on innovation, technology and an enhanced outlook. As we aim to take a bold leap towards further success, we invite our stakeholders to reap the maximum benefits of this phase of growth and evolution of Union Bank.
You claimed to have deployed the latest technology in your operations but Automatted Teller Machines in some of your branches are not working. How do you intend to address this anomaly?
Certainly, over the past three years, the bank has overhauled its technology platform, re-engineered its workforce, upgraded almost 200 branches across the country and re-energised its brand, all in a bid to provide the best and most efficient customer experience.
In July this year, Union Bank also launched a bouquet of exciting digital banking platforms, including the *826# USSD code and a new version of the mobile App, UnionMobile, which have both received very positive responses from customers. There is independent statistic that comes from the Nigeria Interbank Settlement System. In terms of volume and value, we come first.
Union Bank is celebrating 100 years of heritage and service; what are you doing in terms of innovation, rebranding and incorporating the youths to move from the old-fashioned banking system?
We are rebuilding a 100-year-old institution and repositioning the bank to deliver simpler and smarter solutions for the next generation of banking customers. My team and I remain committed to bringing Union Bank back to its leading position in Nigeria’s financial sector.
Will the success of the ongoing N50 billion Rights Issue translate into better dividend for your shareholders?
Of course, it will. This is because the capital raised from the rights issue will support our strategy to accelerate business growth and position Union Bank as a leading commercial bank in Nigeria. By so doing, the fund will boost Union Bank’s performance and deliver good returns to shareholders going forward.
