Emeka Emuwa is Group Managing Director and Chief Executive Officer of Union Bank of Nigeria PLC (UBN)
Union Bank, one of Nigeria’s longest standing and most respected financial institutions, has announced its unaudited financial statements for the period ended June 30 2018.
The lender recorded Non-interest income up by 37% to ₦21.1bn from ₦15.4bn posted in H1 2017 driven by enhanced treasury trading income, recoveries and 311% growth in alternate channel revenues while Net operating income as well increase by 22% to ₦50.9bn from ₦41.9bn posted in H1 2017.
Similarly, a Profit before tax growth of 23% to ₦11.7bn against ₦9.5bn recorded in H1 of 2017 while Gross earnings increase by 16% to ₦83.3bn from ₦72.1bn recorded in H1 2017, the growth according to the lender was driven by a 10% increase in interest income and 37% increase in non-interest income .
Interest income equally soared by 10% to ₦62.2bn from ₦56.6bn recorded in H1 of 2017 while Net interest income before impairment went up by 14% to ₦34.4bn from ₦30.1bn recorded in H1 2017, this was driven by an improvement in net interest margins from 7.9% to 8.2% on the back of lower cost of funds.
Commenting on the results, Emeka Emuwa, CEO said:
“In the first half of the year, we have continued to see positive results from our efficiency and productivity drive. Across all our business lines, we witnessed strong underlying performance, translating into improved earnings. We continue to focus on the recovery of non-performing loans. With the resolution in Q2 2018 of the large real estate exposure which was impaired in December 2017, the Group NPL ratio is down to 10.8% from 14.9% at 31 March 2018 and 19.8% at 31 December 2017. The Group continues to demonstrate its ability to deliver strong results notwithstanding a competitive and challenging operating environment.
Gross earnings rose by 16% to N83.3 billion from N72 billion in H1 2017, underpinned by improved Net Interest Margins (NIM), robust treasury trading income, recoveries and alternate channel revenues, on the back of increased customer adoption. Our Profit Before Tax (PBT) grew by 23% compared to H1 in 2017.
Operating expenses: up 21% to ₦39.2bn (₦32.4bn in H1 2017); largely due to a 25% increase in regulatory levies from the NDIC and AMCON as well as some one-off items.
Gross loans: down 9% to ₦508.5bn (₦560.7bn Dec 2017) due to successful recovery/collection efforts and the write-off of some fully provisioned non-performing loans.
Customer deposits: up 3% to N826.7bn (N802.4bn Dec 2017); reflects 66% increase in foreign currency deposits and the optimization of our local currency deposit book towards low-cost deposits.
“In the second half of the year, we will continue to focus on productivity, leveraging our enhanced platform to deliver best-in-class services to our customers and taking advantage of targeted opportunities across business lines and geographies.”
Speaking on the H1 2018 numbers, Chief Financial Officer, Oyinkan Adewale said:
“With low-cost deposits now accounting for 70% of total deposits, up from 67% as at December 2017, our cost of funds fell in H1 2018. Consequently, the Group NIM has improved from 7.9% in H1 2017 to 8.2% in the period. Our foreign currency deposits are up 66%, compared with December 2017; and up 40% compared with March 2018, as we continued to optimize our balance sheet.
We are pleased that for the first time since 2012, the Group’s retained earnings moved from a negative to a positive position, thus eliminating a major technical impediment to the payment of dividends.
Operating Expenses for the period were affected by some one-off items, as well as a combined 25% increase in NDIC premium and AMCON levy. For the rest of the year, we will intensify our cost rationalization initiatives.
The Bank remains well capitalized with Capital Adequacy Ratio at 18.2%.”
