Union bank plc returning value to shareholders after 11years of dividend drought

A great topic!

Union Bank of Nigeria Plc (UBN) has indeed announced its intention to return value to shareholders after an 11-year dividend drought. This is a significant development for the bank and its shareholders, who have been waiting patiently for a dividend payout.

Here are some key points to note:

  1. Dividend declaration: On August 26, 2021, Union Bank announced a dividend declaration of N0.30 per share, representing a dividend yield of 4.5%. This is the first dividend payout since 2010.
  2. Reasons for the dividend declaration: The bank cited improved financial performance, increased profitability, and a stronger balance sheet as reasons for the dividend declaration. In its 2020 audited financial statements, UBN reported a profit before tax of N44.4 billion, up from N24.4 billion in 2019.
  3. Share price performance: The bank's share price has been on an upward trend in recent months, driven by the dividend declaration and improved financial performance. As of August 31, 2021, the bank's share price had risen by 15.6% year-to-date.
  4. Impact on investors: The dividend declaration is expected to have a positive impact on investors, particularly those who have held onto their shares for an extended period. The dividend payout will provide a return on investment for shareholders and may also attract new investors to the bank's stock.
  5. Compliance with regulatory requirements: The dividend declaration is also seen as a step towards compliance with regulatory requirements. The Central Bank of Nigeria (CBN) and the Nigerian Stock Exchange (NSE) have been pushing banks to maintain a minimum capital adequacy ratio (CAR) of 10% and to pay dividends to shareholders.
  6. Future dividend prospects: While the dividend declaration is a positive development, investors may still be cautious about the bank's future dividend prospects. UBN's dividend payout ratio is still relatively low, and the bank may need to continue to focus on improving its financial performance and reducing its non-performing loans (NPLs) to sustain dividend payments.

In conclusion, Union Bank's decision to return value to shareholders after an 11-year dividend drought is a significant development for the bank and its investors. While there are still challenges to be addressed, the dividend declaration is a positive step towards rebuilding investor confidence and attracting new investors to the bank's stock.