Union Bank earns N109.5bn in 9 months

by Iheanyi Nwachukwu

November 2, 2017 | 12:15 am
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Union Bank Plc has announced its unaudited results for the nine months period ended September 30, 2017. 

The group financial highlights show gross earnings rose by 16percent to N109.5billion (N94.8billion in 9M 2016); driven mostly by 22percent increase in interest income. Profit before tax (PBT) was down 2percent to N13billion (N13.3billion in 9M 2016); Net Income also rose by 7percent but operating expenses increased 10percent.

Interest income increased by 22 percent to N88.5billion (N72.3billion in 9M 2016); driven mostly by 23percent growth in average gross loans from N412billion for 9M 2016 to N507billion for 9M 2017. Net interest income after impairment: up 16percent to N40.9bbillion (N35.2billion in 9M 2016).

Impairment: down 53percent to N6.0billion (N12.9billion in 9M 2016); coverage ratio has strengthened to 203percent as at September 30, 2017, from 182percent as at December 2016. Non-interest revenue: down 6percent to N21billion (N22.5billion in 9M 2016); excluding non-recurring naira devaluation gain of N4.7billion in 9M 2016, 9M 2017improved by 18percent.

Operating expenses: up 10percent at N49billion (N44.6billion in 9M 2016); increase driven largely by double-digit inflation amid continued capital investments in technology and naira devaluation. Gross loans: down 5percent to N508.6billion (N535.8billion in Dec 2016).  Customer deposits: up 17percent to N767.9billion (N658.4billion in Dec 2016); a customer-centric product suite, a revamped digital platform and the launch of a new advertising campaign have delivered 63percent YTD increase in new-to-bank customers in 2017.

Commenting on the bank’s results for the nine month period, its Chief Executive Officer Emeka Emuwa said: “We remain encouraged by the results of our customer acquisition strategy, as customers continue to respond to our targeted market offerings and increased brand awareness, following the debut of a new advertising campaign to support the launch of Union Bank’s new digital platform, including our revamped mobile banking app and *826#, our SMS banking platform.

Customer deposits are up 17percent from December 2016 to close the period at N767.9billion. Group Gross Earnings, at N109.5billion, reflect a 16percent growth compared to the period ended 30 September 2016.

However, a challenging macro-operating environment, characterised by double-digit inflation, continues to create headwinds for businesses, constrict consumer purchasing power and pressure operating expenses as well as portfolio quality.

Consequently, core pre-tax earnings for the period were marginally lower at ₦13.0bn compared to ₦13.3bn in 9M 2016.

With the ₦50bn capital raise underway, we remain focused on our strategic priorities and expect this new capital to deliver the momentum needed to accelerate the pace of our business growth.”

Speaking further on the numbers, Chief Financial Officer, Oyinkan Adewale said:

“The Group’s net interest income after impairments improved significantly by 16% from N35.2bn to N40.9bn compared to the period ended 30 September 2016. Non-interest income is down by 6% compared to 9M 2016, which included one-time revaluation gains.

With our continued focus on early problem recognition and prudent provisioning, our coverage ratio has strengthened to 203percent as at 30 September 2017, from 182% as at December 2016.

The impact of naira devaluation, coupled with the inflationary environment, has pressured our cost-to-income ratio, especially as we continue to make investments in technology critical to our long-term business strategy. We are confident that these investments will deliver the expected cost benefits in the medium term. We also expect improved capital adequacy and higher revenues, fuelled by N50bn of new capital.

Union Bank remains on course to deliver on its key objectives in 2017. The bank’s plans to raise N50 billion in Tier 1 Capital through a rights issue formally opened on September 20 and closed on October 30.

The capital increase supports the bank’s short to medium term growth objectives as it looks to re-position itself as one of Nigeria’s leading commercial banks. The new capital will also ensure the bank maintains a strong buffer above regulatory capital adequacy requirements.

Iheanyi Nwachukwu


by Iheanyi Nwachukwu

November 2, 2017 | 12:15 am
  |     |     |   Start Conversation

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