Union Bank of Nigeria reports 25% increase in profit to N11.5bn

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By Kayode Tokede

Union Bank Plc in its unaudited half year results to The Nigerian Stock Exchange (NSE)on Wednesday reported 25 per cent increase in Profit After Tax to N11.5 billion in H1 2018 from N9.2 billion reported in H1 2017.

One of Nigeria’s longest standing and most respected financial institutions, said gross earnings rose by 16per cent to N83.3billion, from N72.1billion in H1 2017, driven by a 10per cent increase in interest income and 37per cent increase in non-interest income.

Operating expense jump by 21per cent to N39.2billion from N32.4billion in H1 2017, largely due to a 25per cent increase in regulatory levies from the Nigeria Deposit Insurance Corporation (NDIC) and Asset Management Corporation of Nigeria (AMCON).

The group gross loans: down nine per cent to N508.5billion from N560.7billion in 2017, due to successful recovery/collection efforts and the write-off of some fully provisioned non-performing loans.

In addition, customer deposits: up three per cent to N826.7billion from N802.4billion in  2017,  that reflects 66per cent increase in foreign currency deposits and the optimization of our local currency deposit book towards low-cost deposits.

Commenting on the results, Chief Executive Officer, Union Bank of Nigeria, Mr. Emeka Emuwa,  said, “In the first half of the year, we have continued to see positive results from our efficiency and productivity drive. Across all our business lines, we witnessed strong underlying performance, translating into improved earnings. We continue to focus on the recovery of non-performing loans.

“With the resolution in Q2 2018 of the large real estate exposure which was impaired in December 2017, the Group NPL ratio is down to 10.8per cent from 14.9per cent at 31 March 2018 and 19.8per cent in 2017.

“The Group continues to demonstrate its ability to deliver strong results notwithstanding a competitive and challenging operating environment.

“Gross earnings rose by 16per cent to N83.3 billion from N72 billion in H1 2017, underpinned by improved Net Interest Margins (NIM), robust treasury trading income, recoveries and alternate channel revenues, on the back of increased customer adoption. Our Profit Before Tax (PBT) grew by 23per cent compared to H1 in 2017.

“In the second half of the year, we will continue to focus on productivity, leveraging our enhanced platform to deliver best-in-class services to our customers and taking advantage of targeted opportunities across business lines and geographies.”

Speaking on the H1 2018 numbers, Chief Financial Officer, Oyinkan Adewale said: “With low-cost deposits now accounting for 70per cent of total deposits, up from 67per cent as at December 2017, our cost of funds fell in H1 2018. Consequently, the Group NIM has improved from 7.9per cent in H1 2017 to 8.2per cent in the period.

“Our foreign currency deposits are up 66%, compared with December 2017; and up 40per cent compared with March 2018, as we continued to optimize our balance sheet.

“We are pleased that for the first time since 2012, the Group’s retained earnings moved from a negative to a positive position, thus eliminating a major technical impediment to the payment of dividends.

Operating Expenses for the period were affected by some one-off items, as well as a combined 25per cent increase in NDIC premium and AMCON levy. For the rest of the year, we will intensify our cost rationalization initiatives.

“The Bank remains well capitalized with Capital Adequacy Ratio at 18.2per cent.”

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