Union Bank of Nigeria Plc has released its unaudited financial statements for the period ended June 30, 2019. The group financial highlights show profit before tax (PBT) grew by 4percent to N12.1billion in the first-half (H1) of 2019 as against N11.7billion in H1 2018.
The bank’s gross earnings declined 9percent to N76billion (N83.3billion in H1 2018). Union Bank linked the earnings decline to a decrease in average earning assets.
Union Bank hosted a conference call for investors, analysts and financial journalists on Tuesday July 30, 2019 were it is executive management team discussed the H1 2019 results and responded to questions.
At N6.85kobo per share as of July 29, Union Bank Plc share price has risen by 22.3percent year-to-date (YTD).
In the H1’19, Union Bank’s interest income was down by 8percent to N57.3billion (N62.2billion in H1 2018). Net interest income after impairment went up 3percent to N30.5billion (N29.7billion in H1 2018); supported by an aggressive drive in collections.
Non- interest income was down 12percent to N18.7billion (N21.1billion in H1 2018).
It said it was due to muted volatility negatively impacting trading income, despite a 27percent growth in credit related fees and 169percent growth in cash recoveries at N5.3billion (N1.9billion in H1 2018).
The bank’s net operating income was slightly down by 2percent to N49.6billion ( N50.9billion in H1 2018). Operating expenses went down by 4percent to N37.5billion (N39.2billion in H1 2018). “It reflects the gains of our cost optimisation programme – Project LEAP”, the bank said.
Union Bank gross loans were up 8percent to N563billion ( N519.7billion December 2018) driven by increased risk asset creation across priority economic sectors.
Customer deposits rose by 4percent to N889.5billion ( N857.6billion December 2018); “demonstrating the success of our on- going acquisition of low-cost deposits driven by strengthened brand affinity,” said Emeka Emuwa, CEO, Union Bank of Nigeria Plc.
“Notwithstanding the realities of operating in a challenging economic environment, the Group delivered a 4 percent growth in Profit Before Tax (PBT) to N12.1billion from N11.7 billion in H1 2018,” he further noted while commenting on the results.
“To sustain growth in earnings, we remained steadfast in our commitment to delivering value and firstclass customer experience to all our customers. We have developed a concerted and clear plan to increase our risk assets with our loan book growing by 8percent to N563.0 billion compared to yearend 2018. The ability to take on more risk is hinged on our robust risk management and debt recovery processes working in sync which led to recoveries of over N5 billion in the period”, Emuwa said.
“We successfully closed our Series 3, 10 year N30 billion bond in June, as part of our n100 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. This further reinforces the confidence of the investor community in Union Bank. With this new injection of tier 2 capital, we are well positioned to deliver on our growth strategy and priorities”, according to the CEO.
Looking ahead, the bank said it will continue to focus on opportunities to “deliver our simpler, smarter banking promise to our customers while improving internal operational efficiencies which will translate to enhanced shareholder value.”
Speaking on the H1 2019 numbers, Joe Mbulu, Chief Financial Officer, Union Bank of Nigeria Plc said: “In the first half of 2019, we continued with our expansion strategy to grow our agency banking footprint which in turn boosted customer confidence in our brand. Customer deposits have followed the same trajectory with a 4percent growth, to N889.5 billion as at June 2019 from N857.6 billion in December 2018. Net Interest Income after Impairments is also up 3percent to N30.5 billion compared to N29.7 billion in the same period in 2018.”
“With our aggressive focus on recoveries and improving asset quality, the Bank’s NPL ratio has continued its downward trend, declining to 7.3percent from 8.1percent as at December 2018 ahead of full year 2019 guidance. Improvement in asset quality has enabled us to grow our loan book optimally in the first half of 2019, positioning us with the ability to take on emerging opportunities in key sectors of the economy”, Mbulu said.
