• Friday, March 29, 2024
businessday logo

BusinessDay

Union Bank profit rises 3.5 percent to N11.85bn in H1

Union Bank partners 54Gene towards Nigeria’s fight against Coronavirus, donates N50million

Union Bank, a listed mid-tier lender, has announced it grew profit by 3.45 percent in the half-year 2019 period.

The lender posted a profit of N11.85 billion for the six month to June 30, 2019; this is against N11.46 billion reported a year ago. On a quarterly basis, Union Bank grew profit by 26.89 percent in the second quarter after ending the first three months with 4 percent.

Shares of Union bank remained flat at N6.85 per share on Monday. It has gained 22.32 percent so far in 2019.

Emeka Emuwa, Union Bank CEO noted the lender’s resilience in delivering growth despite a challenging economic environment and affirmed commitment to delivering value.

“We have developed a concerted and clear plan to increase our risk assets with our loan book growing by 8% to ₦563.0 billion compared to year-end 2018,” he said.

According to Emuwa, the ability to take on more risk is hinged on Union bank’s robust risk management and debt recovery processes working in sync which, he said, led to recoveries of over N5 billion in the period.

The Bank’s NPL ratio declined to 7.3 percent from 8.1 percent as at December 2018 ahead of full year 2019 guidance, Union bank stated in its latest scorecard.

In H1, gross earnings of Union bank decreased by 8.78 percent to N76.0 billion (₦83.3bn in H1 2018), due to a decrease in average earning assets.

Interest income fell 7.80 percent to N57.35 billion while interest cost rose to N31.35 billion, 12.56 percent higher than a year ago. Consequently the lender’s net interest income (net revenue from fund) declined 24.32 percent although net interest income after impairment charges for credit losses improved some 3 percent.

Non-interest income declined 11.66 percent to N18.7bn from N21.1bn in H1 2018 which the bank attributed to the impact of muted volatility on trading income. Net trading income declined by 48 percent of its 2018 value offsetting growth in credit-related fees and cash recoveries.

Operating income slowed by 3.35 percent. The lender however recorded 23-fold increases in net impairment write-back on other financial assets, and lower expenses to post a 3.96 increase in profit before tax which grew to N12.13 billion.

Union bank closed its Series 3, 10 year ₦30 billion bond in June, as part of the bank’s ₦100 billion debt capital programme.

“This series, which was once again fully subscribed, is the largest 10-year bond issued by a Nigerian corporate to date,” said Emuwa. “With this new injection of tier 2 capital, we are well positioned to deliver on our growth strategy and priorities.”

Union Bank disclosed the funding boosted its Capital Adequacy Ratio (CAR) which stood at 19.4 percent in June 2019 compared to 16.4 percent as at December 2018.

 

SEGUN ADAMS