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Union Bank H1’20 earnings hit N79.7bn as non-internet income jump 22%

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Union Bank has released its financial performance for the first six months of the year. Analysis show that gross earnings was up 10percent on the back of an increase in earning assets to N79.9bn from N72.4bn in H1 2019

The bank’s interest income increased 6percent to N57.2bn from N53.8bn in H1 2019 driven by increase in earning assets, Net interest income before impairment: up 21% to N28.0bn from N23.2bn in H1 2019, this was largely driven by a reduction in interest expense.

Non-interest income increased 22percent to N22.7bn from N18.6bn in H1 2019, thanks to an impressive growth in e-business and revaluation gains. Gross loans up 6% to N630.5bn from N595.3bn Dec 2019; reflecting the opportunities for risk asset creation given economic realities. Customer deposits grew 12% to N995.2bn from N886.3bn Dec 2019. Profit before tax was sustained at N11.3bn at N11.2bn in H1 2019.

Reacting to the bank’s Half year performance, Emeka Emuwa, CEO Union Bank said the impact of COVID-19 and associated movement restrictions on the Bank and the wider economy has been broad.

“Notwithstanding these significant headwinds, the Bank delivered a 10% increase in its top line revenue of N79.9bn for H1 2020. In addition, net interest income before impairments is up 21% to N28.0bn and non-interest income up 22% to N22.7bn,” he said.

“The slowdown limited growth in key income lines including fees and commissions and cash recoveries. However, we continue to reinforce the use of our digital channels with 90% of transactions completed digitally in H1 2020 (vs. 57% in H1 2019), which translated to a 42% growth in e-business fees from N2.5bn in H1 2019 to N3.6bn in H1 2020. We deliberately grew our loan portfolio both in the retail and commercial/corporate banking space resulting in a 6% growth in interest income,” he added.

Chief Financial Officer, Joe Mbulu noted that notwithstanding increasing inflation and unexpected costs related to the changes to our operating structures during COVID-19 lockdown, the bank has been able to keep operating expenses under control during H1 2020.

“We also grew customer deposits by 12% to N995.2bn from N886.4bn in December 2019 as a result of increased customer demand for our banking products and the continued positive perception of our brand. We continue to deliberately expand our loan book with a focus on key industry segments. As impairments began to rise as a result of COVID-19 disruptions, the NPL ratio ticked up marginally to 6.3%, compared to 5.8% in December 2019, while our Capital Adequacy Ratio is at 19.2%, remaining well above the regulatory threshold,” he said.

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