In contrast to its 2022 profit of ₦941 million, Unity Bank Plc reported a substantial loss of ₦62.6 billion for the fiscal year that ended on December 31, 2023. This decline highlights the numerous difficulties the bank encountered over that time, which led to a financial crisis that required calculated actions, such as a merger with Providus Bank in August 2024. The publication of the 2023 financial results has been deferred to February 2025.
The delay was due to multiple factors: regulatory approval delays for previous financial statements, difficulties from the merger with Providus Bank, and extensive documentation demands related to financial accommodations from the Central Bank of Nigeria (CBN). These problems collectively led to the postponement of the financial results publication.
Unity Bank’s financial situation worsened as a result of rising operational costs and significant impairment charges associated with non-performing loans, even though its gross earnings increased slightly to ₦59.36 billion in 2023 from ₦57.15 billion in 2022. The seriousness of the bank’s financial difficulties was demonstrated by the 535.85 kobo loss per share that resulted from this poor performance. According to the bank’s financial statement, there was a negative equity of ₦326.9 billion because its total liabilities were ₦845.6 billion compared to its total assets of ₦518.7 billion. A capital adequacy ratio (CAR) of -76.14% resulted from this imbalance, which is much lower than the CBN’s minimum requirement of 10% for national banks. Such a deficit raises questions about the bank’s operating viability in the absence of significant recapitalization, in addition to highlighting its insolvency.
KPMG, the bank’s external auditor, expressed grave concerns regarding Unity Bank’s ability to continue as a going concern. The auditor’s report emphasized the bank’s failure to meet regulatory capital requirements and its negative equity position, casting significant doubt on its capacity to sustain operations without considerable financial infusion. These concerns were first highlighted in 2022, indicating a prolonged period of financial instability.
Unity Bank investigated a number of methods to bring stability back to its unstable financial situation. In order to improve financial resiliency and consolidate resources, the August 2024 merger with Providus Bank was a crucial step. With the help of a ₦700 billion financial accommodation from the CBN, this merger was essentially seen as Unity Bank’s lifeline, giving it the money it needed to fix its deficits and meet legal obligations.
Unity Bank has been actively looking for new capital to meet the CBN’s ₦200 billion recapitalization benchmark for national banks. The bank is taking into account a number of options, such as rights issues, public offers, private placements, and more mergers and acquisitions. These initiatives are essential to ensuring the bank’s long-term viability and meeting the regulatory bodies’ 2026 target. Unity Bank’s recovery attempts have received assistance from the CBN. The CBN provided a short-term financial accommodation of ₦50 billion to support the bank’s working capital in addition to the ₦700 billion facility for the merger. This backing demonstrates the regulatory body’s dedication to preserving banking industry stability and averting systemic dangers brought on by bank collapses.
The financial difficulties facing Unity Bank have been getting worse in recent years. The bank recorded ₦38.8 billion in losses in the first half of 2023, mostly as a result of a ₦35.4 billion foreign exchange revaluation loss. Compared to the ₦1.6 billion profit made during the same time period in 2022, this represented a considerable decline. The bank’s financial problems were made worse by more losses in the third quarter of 2023, which included a reported ₦47.9 billion deficit after taxes.
