Oct 26 (Lagos) - Unity Bank Plc ( UNITYBNK
) has announced a dip in profit before tax to N 3.8 billion for the third quarter ended September 30 this year against N 10.3 billion during same period of last year.
The lender however announced that its total assets grew to N 476.15 billion during the period under review. The figure represents an increase of 7.4 per cent or N 2.6 billion over N 443.3 billion recorded as at 31 December, last year.
stock went through deep surgery since the shareholders voted in a quickly called meeting at Intercontinental Hotel in Dec 2013 when the stock price was 50 Kobo per unit. Shareholders voted to do a rights issue and a 10-1 reverse split. This measure would push the stock price to N 5 as a result on sharp reduction in shares outstanding post the reverse split.
Increase shares outstanding as a result of the rights issue.
Sharply reduce shares outstanding after the 10-1 reverse split.
And the money that was raised from the rights issue was supposed to build a new age retail bank that will be the best retail bank of Nigeria. One member of board even gave a speech on how the Unity Bank stock price will never fall from N 5 after implementing all these plans.
Since then the management implemented shareholders wishes. New shares were issued and then few months later every set of 10 shares was merged in to 1 share.
This pushed the stock price to N 5 per unit from 50 Kobo per unit. The reason was reduction in shares outstanding and had nothing to do with good performance from the Bank.
Today the stock price is 68 kobo per unit. That is to say the stock price is less than 7 kobo per unit in pre split terms. That is a loss of almost 90% for shareholders.
A new CEO who was appointed resigned from the bank shortly afterwards amid corruption allegations. Now another CEO is in charge and the Bank has recently moved into its new building in Victoria Island, Lagos.
Shareholders of this bank have been left holding the bag for a long time now. It will be a bold decision to invest in this bank again.
But there was some talk of a merger between UNITYBNK
and another regional lender who in going National.
Another undesirable fact is that UNITYBNK
does not pay a dividend to its shareholders.
However it must be kept in mind that management could do another rights issue.
People like to blame SEC for these kinds of issues that happen but the fact is that SEC cant do anything if the management of a bank is able to get shareholders approval to implement their plans no matter how confusing or inconsistent those plans may be.
reporting for easykobo.com on Wednesday, Oct 26 2016 from Lagos, Nigeria
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