Nigeria's Unity Bank has reported a staggering loss of ₦62.6 billion for the financial year ended December 31, 2023, marking a sharp reversal from a profit of ₦941 million in 2022. The bank's audited 2023 financial statements reveal a challenging fiscal period for the lender, which merged with Providus Bank in August 2024—a move largely considered a lifeline for the struggling Unity Bank.

The bank's delayed release of its 2023 financial report until 2025 was attributed to regulatory approval delays for previous financial statements, complexities from its merger with Providus Bank, and extensive documentation requirements tied to financial accommodations from the Central Bank of Nigeria (CBN).

Despite a marginal increase in gross earnings to ₦59.36 billion in 2023 from ₦57.15 billion in 2022, rising operational expenses and significant impairment charges linked to non-performing loans wiped out these gains, resulting in a loss per share of 535.85 kobo.

The bank's balance sheet paints a dire picture, with total liabilities amounting to ₦845.6 billion and total assets standing at ₦518.7 billion. The bank's total liabilities surpassed total assets by ₦326.9 billion, resulting in a negative capital adequacy ratio (CAR) of 76.14%. This figure falls drastically short of the CBN's required minimum CAR of 10% for national banks.

In its auditor's report, KPMG raised concerns about Unity Bank's going concern status. The report noted that the bank's inability to meet regulatory capital requirements and its negative equity position cast significant doubt on its ability to continue operations without substantial recapitalisation. Unity Bank's financial position has been precarious since analysts from KPMG queried its 2022 financial statements.

To address its capital shortfall, Unity Bank said it is "exploring all options" including injection of capital through private placements, rights issues, public offers, subscriptions, mergers, and acquisitions ahead of the 2026 deadline. The bank would need to raise fresh capital to meet the CBN's ₦200 billion recapitalization threshold for national banks.

Unity Bank disclosed receiving financial support from the CBN. The bank was granted a short-term financial accommodation of ₦50 billion to augment its working capital requirements. This facility comes with a maturity date of December 31, 2024. In July 2024, the CBN approved another financial accommodation for its merger with Providus Bank, amounting to ₦700 billion.

Analysts say Unity Bank's survival hinges on securing substantial capital inflows and restructuring its loan portfolio. The Asset Management Corporation of Nigeria (AMCON), the bank's largest shareholder with a 34.22% stake, may play a pivotal role in any recapitalisation efforts. However, market observers caution that investor confidence could remain low until the bank demonstrates concrete progress in addressing its capital shortfall.

The bank's precarious financial position has sparked concerns over its ability to continue operations without significant intervention. As Unity Bank navigates these challenges, its future remains uncertain, and its ability to regain stability will be closely watched by industry observers and stakeholders alike.