Union Bank regains investors’ confidence with Q3 profit growth   

Union Bank Nigeria Plc has continued to regain more investor’s confidence with its impressive growth in earnings despite the slump in oil prices, a weak naira and wobbling economy.

The efforts of the management of the bank to reposition it for better performance has paid off as growth at the top and bottom lines places the lender in an upside positions since analysts say investors will swoop on the stocks.

For the first nine months through September 2015, Union Bank’s net income increased by 15.04 percent to N9.33 billion, from N8.08 billion the previous year.

BusinessDay calculations showed the significant growth in interest income also helped bolster profits.

Interest income jumped by 19.30 percent to N66.63 billion in 2015 as against N55.85 billion last year; attributable to increased interest on loans and advances.

Gross earnings moved by 6.42 percent to N84.72 billion in 2015 compared with N79.60 billion last year.

Industry analysts say Union Bank has defied the economic headwinds making most lenders and companies Africa largest economy fret.

The Central Bank of Nigeria applied rules and restrictions to stabilise the naira after it declined to a record low in February as the price of oil, the nation’s major foreign-exchange earner fell by a half in the second half of last year.

The central bank has devalued the naira twice since November and prevented banks from buying dollars in the interbank market without matching orders, steadying the exchange rate while reducing liquidity.

The Abuja based bank policy of streamlining the dollars and placing a ceiling on foreign-exchange trading have stabilized the naira, which has remained at about 198-199 per dollar since declining 8 percent in the first quarter.

Despite these challenges, Union Bank remained efficient as cost to income ratio (CIR) reduced to 82.23 percent in the period under review as against 84.77 percent in 2014.

The lower CIR means the bank is controlling costs while boosting profits. Operating expenses were up by a mere 1.15 percent to N43.70 billion in 2015 as against N44.21 billion last year.

Union Bank was aggressive about lending despite as loans to deposit ratio increased to 68.61 percent in the period under review as against 59.28 percent the last year. Deposits to customers fell by 0.51 percent to N526.89 billion.

Loans and advances increased by 15.57 percent to N361.89 billion in September 2015 as against N312.80 billion the previous year. Total assets jumped by 8 percent to N1.08 trillion in 2015 as against N1 trillion last years.

Union Bank’s share price appreciated by 2.12 percent to close at N5.79 on the floor of the exchange; market capitalization was N96.02 billion.