Managing Director/CEO, Union Bank of Nigeria Plc
(For his outstanding progress in building value through loan recovery and navigating the bank through a volatile terrain into stability, Emuwa is named one of the top 10 bankers of the year, 2019 by The Top10 Magazine.)
Mr. Emeka Emuwa, managing director/CEO, Union Bank of Nigeria Plc, made a roundabout shift in 2018 to a net loan impairment write back position that changed his bank’s earnings story in that year. He is again one of the few bank CEOs that didn’t let the loan recovery momentum slip off their hands in 2019.
His loan recovery machinery yielded cost savings in excess of N11 billion at the end of the third quarter, up on the N29 billion saved from loan loss expenses in the preceding year. Cash recoveries more than doubled at 114 percent to over N8 billion at the end of the third quarter in September 2019.
Risk management is Emuwa’s area of competence, which has enabled him to minimize credit losses for his bank and therefore prevented the level of earnings volatility experienced by many other banks. A big reduction in specific impairment charges speaks of fundamental improvements in the overall credit quality standard of the bank.
The Union Bank’s boss rode on the back of net loan impairment write back to deliver the strongest profit advance in four years in 2018. Maintaining the course in 2019, loan loss write back provided a big cost saving that enabled him to defend profit in the face of revenue decline.
Keeping profit up when revenue failed was the management science at work in Union Bank in the 2019 financial year. How the bank’s management defended profit against a drop in revenue for the second year is the summary of the bank’s operations as at the end of the third quarter of last year.
The revenue outlook for the bank faced down for the second year at the end of September 2019 but Emuwa ably shielded shareholders from the volatile picture of incomes. That was equally the summary of Union Bank’s operating story in 2018 when he delivered a 44 percent rise in net profit from an 11 percent drop in gross earnings.
The bank’s revenue performance remained weak but improving as at the end of the third quarter. The margin of decline in gross earnings shrank drastically in the third quarter, leaving good prospects that management could change a 4 percent decline at the end of the third quarter into a reasonable growth at full year. The bank’s third quarter operations ended with gross earnings of N117.15 billion.
Non-interest income was the main drag in the earnings field in 2019, which Emuwa countered largely by reinforcing the growth of interest income during the period. The full year revenue outlook of the bank is brightened by a likely further improvement in the final quarter.
Defending profit against the weak revenue performance is the difference that Emuwa’s management has made in the Union Bank’s operating story at the end of the third quarter. His management accomplished that by cutting cost at two major angles.
A shift from a net loan impairment charge of N7.4 billion in the same period in 2018 to a net write back of N3.8 billion at the end of the third quarter provided the biggest cost saving centre for the bank. At the end of September 2019, the net write back position was in excess of the full year figure in 2018.
The second cost saving line is operating cost, which has changed direction sharply from an accelerated growth in the preceding two years to a year-on-year decline at the end of September 2019. The key operating costs – personnel and other operating expenses, led the cost cutting drive.
Interest cost was a torn in the flesh for Union Bank in 2019. Cost of funds grew at 18 percent while interest income declined at the end of the third quarter. The volatile effect of this development shrank net interest income a clear 18 percent at the end of September 2019.
Union Bank needed critically cost savings big enough to defend profit in the face of volatile revenue. Emuwa provided a big remedy with the change from a net loan impairment expenses to a net write back position over the review period. He applied writing back previous credit losses to profit to keep profit up for the second year in 2019. This yielded the bank an apparent windfall compared to a big net charge in the same period in 2018.
He extracted further cost saving from operating expenses – which changed direction from a 12.5 percent growth in 2018 to a decline of 3 percent at the end of the third quarter of 2019. The bank’s management applied the cost savings to level up the drop in net interest income during the period.
The bank was therefore able to push after tax profit up by roughly 4 percent year-on-year to a little over N15 billion at the end of the third quarter. It gained some strength in converting revenue into profit with net profit margin edging up from 12 at the end of 2018 to 13 percent at the end of the third quarter – the highest profit margin for the bank since 2015.
Emuwa is expected to close the 2019 operations with an exciting corporate earning story – of strengthened revenue performance and sustained net loan impairment write back. He is likely to be showing how he applied cost savings from operating expenses to deal with a problem of inability to tame interest expenses.
For his outstanding progress in building value through loan recovery and navigating the bank through a volatile terrain into stability, Emuwa is named one of the top 10 bankers of the year, 2019 by The Top10 Magazine.
Emuwa was called by Union Bank’s core investors to replicate in the bank the success story he chronicled in Citibank Nigeria Ltd. His task is to drive the transformation agenda of a bank hungry for rapid recovery and growth. He developed a roadmap to return the bank to glory and defined the strategy that has re-launched the bank into the marketplace.
He has extensive experience in credit risk management, strategy, negotiation, leadership and people management in addition to treasury, corporate finance and cash management.
He became group managing director and chief executive officer of the bank in November 2012. Before then, he put in 25 years at Citibank Nigeria Ltd where he rose through the ranks from management associate in 1986 to managing director and Citi Country Officer, Nigeria.
While at Citibank, he served as Citi Country Officer in Cameroon, Tanzania, Gabon, Congo, Ghana and Niger and also worked in various positions within Nigeria. He is the first Nigerian to be appointed managing director and chief executive officer at Citibank.
Emuwa holds a BSc. in finance from the University of Lagos and MSc. in management from the Krannert School of Management, Purdue University, USA.
