No dividend for shareholders until we have positive retained earnings-Union Bank MD

By Kayode Ogunwale


MANAGING Director of Union Bank of Nigeria (UBN), Mr. Emeka Emuwa has said that, shareholders of should not expect any dividend on their investments until the bank’s retained earnings return positive.
He revealed this during the facts behind the offer of the bank held at the Nigerian Stock Exchange (NSE) today in Lagos.
According to him, “We are going through a regulatory process to eliminate negative retained earnings as this will enable us to pay dividend in the nearest future.”
Union Bank has not been able to pay its shareholders dividend since 2008 due to trajectory that makes the Central Bank of Nigeria to change the management and board of the bank.
The lender’s boss pointed out that since recapitalisation, Union Bank has sustained its positive performance trajectory, saying incremental capital will guarantee sustained growth and shareholder returns.
Speaking on the ongoing rights issue, he said the N50 billion rights issue would enhanced Union Bank capital base and better position it to deliver stronger and sustained shareholder returns.
The Bank is raising N49.7 billion through right issues, issuing 12.1 billion ordinary shares of 50 kobo each at N4.10 per share, on the basis of five new ordinary shares for every seven ordinary shares held as at August 21, 2017. The offer which opened on September 20, 2017 will close on October 30, 2017.
Emuwa said, “The proceed of the fund will be used for enhancing the Bank’s regulatory capital requirement, increasing working capital and grow in strategic area that correspond to emerging opportunities in Nigeria, enhancing technological platforms through strategic investments in technology and digitalisation and optimising customer experience with investments in customer touch points.”
According to him, this offer will improve capital adequacy ration for the long term and build a strong buffer for regulatory requirements.
“The fund will also create additional and grow risk assets in strategic market segments and sectors, thereby enhancing lending capacity”
He further noted “We aspired to be the leading mid-tier Bank by 2018 and a top tier Bank from 2021.”
Speaking on strategic use of the proceeds, he stated that 80 per cent of proceeds to be used as working capital, saying that the Bank will deploy the working capital from right issue to six priority area which is in line to key growth sectors of the economy and federal government, Agriculture, Manufacturing, Solid Minerals, Services, Construction and Real Estate and Oil and Gas.
He added that 12 percent invested in technology, innovation and digitalisation and eight per cent invested in customer touch points.