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Union Bank grows profit by 16% to N5.4billion in Q1 2018

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Union Bank


Grosses N163.8bn in 2017
Union Bank of Nigeria (UBN) Plc, one of Nigeria’s oldest surviving and most respected financial institutions, has recorded considerable growth in key performance indicators in the first quarter (Q1) 2018, giving prospects of better returns for the business year.

The bank’s interim report and accounts for Q1 ended March 31, showed that gross earnings rose by 15 per cent, while profits before and after tax grew by 16 per cent and 17 per cent respectively.The Q1 report, which was released alongside the audited report for 2017 yesterday, at the Nigerian Stock Exchange (NSE), showed that Union Bank improved on its last year’s commendable performance.

The three-month report showed gross earnings of N39.5billion in Q1 2018 against N34.3billion in Q1 2017. Profit before tax rose from N4.7billion in Q1 2017 to N5.4billion a year after. Profit after tax also increased to N5.3billion in Q1 2018 compared with N4.5billion a year ago.

The Chief Executive Officer, Union Bank, Emeka Emuwa, said the Q1 results reflected the bank’s renewed focus on driving efficiency and productivity with a view to fully leveraging resources including human, technology, and new capital to maximise the bottom line.

“While we are just in the early stages of this drive, we are already starting to see positive results,” Emuwa said.The top-line performance was driven by improvement in net interest margins from 7.1 per cent to 8.7 per cent, and 18 per cent increase in non-interest income due to enhanced trading income and increased volumes on alternate banking channels.

Interest income had grown by 14 per cent to N31.7billion in Q1 2018, against N27.7billion a year ago. Net interest income before impairment increased by 22 per cent to N17.8billion compared to N14.6billion during the review period, driven by 14 per cent increase in interest income, and a lower six per cent increase in interest expense. Non-interest income also rose by 18 per cent from N6.6billion to N7.8 billion.

The audited report for the year ended December 31, 2017, showed that gross earnings rose by 26 per cent from N126.6billion in 2016 to N163.8billion in 2017. Profit before tax was largely flat at N15.5billion in 2017 against N15.7billion in 2016.The CEO explained that the group’s non-performing loan ratio had improved to 14.9 per cent by March end from 19.8 per cent at the start of this year. He noted that the bank has continued to maintain aggressive focus on its impaired loans and is expected to resolve some large exposures in the course of the year, which will further drive down the ratio.

He added that the bank has been pushing strongly on debt recovery efforts across board including initiating or continuing legal action where necessary.“For the first half of the year, we will continue to hone initiatives around our productivity drive, focusing our people on targeted opportunities across regions and optimising our technology and digital platforms to deliver operational efficiency and improved customer service,” Emuwa said.

Operational highlights indicated continuing success of the bank’s simple, tech-savvy growth strategy with 68 per cent increase in new-to-bank accounts, underlining customer acceptance of new products and increasing brand penetration.

The bank also saw 90 per cent increase in volume of funds transfer transactions on its alternate channels, highlighting efficiencies gained from technology investments which are driving increased customer adoption. This led to 58 times increase in net alternate channel fee income, underlining efficiencies gained from investments in alternate channels.

Chief Financial Officer of Union Bank, Oyinkan Adewale, said while the Q1 results reflected the adoption of International Financial Reporting Standards (IFRS) 9, which came into effect at the start of 2018, the bank’s regulatory risk reserve was adequate to absorb the impact of the new accounting rules.

“Our capital adequacy ratio (CAR) remains robust at 17.9 per cent in spite of the impact of IFRS 9 on impairments. Liquidity ratio is at 39.4 per cent, well above the minimum requirement, while net interest margin improved to 8.73 per cent in first quarter 2018 from 7.14 per cent in first quarter 2017,” Adewale said.

She noted that despite 19 percent and 27 percent increase in the bank’s Asset Management Corporation of Nigeria (AMCON) levy, and Nigeria Deposit Insurance Corporation (NDIC) premium respectively, the bank’s operating expenses increased by only 10 per cent, reflecting management’s continuing focus on optimising operating costs.“We will continue to be proactive in managing the risks in our business as we pursue targeted opportunities identified for growth,” Adewale assured.


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Emeka EmuwaUnion Bank
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