Union Bank grows 2016 PAT by 8% to raise N50b in Q2

Union Bank, has announced an 8 percent increase in profit after tax of N15.4 billion in its audited financial statements for the year ended 31st December 2016.

The bank also announced plans to raise N50 billion in Tier 1 capital in the second quarter (Q2) of the year, for the purpose of maintaining compliance with regulatory capital requirements, accelerating business growth and to position as a leading commercial bank in Nigeria.

The group’s income statement showed Profit before tax was up 6 percent to N15.7bn compared to N14.9bn in 2015 and interest income was up 8 percent to N98bn from N90.9bn in 2015, which the bank said was driven by loan book growth and improved Bank asset yields.

Interest expense was moderated by 6 percent to N33bn from N35bn in 2015 on account of improved customer funding base; less reliance on expensive interbank funding, which led to a 5 percent drop in core cost of funds in 2016 from 7 percent recorded in 2015.

Net revenue before impairment increased 14 percent to N93.6bn from 81.9bn in 2015 as Net Interest Margins improved from 8.45 percent to 8.65 percent

Income from e-business channels improved Non-interest revenue by 9 percent to N28.6bn from N26.2bn in 2015, while Operating expenses (OPEX) rose 7 percent to N62.0bn from N57.9bn in 2015 in the face of inflationary and devaluation pressures and ongoing investments in technology and network infrastructure. Union Bank noted that OPEX held flat from 2013 to 2015.

Statement of financial position of the lender showed that Gross loans increased 38 percent to N535.8bn from N388.8bn as at Dec 2015, with 25 percent of the growth being the impact of devaluation on foreign currency loans.

Customer deposits were up 15 percent to N658.4bn compared to N570.6bn as at Dec 2015. The increase was on account of new product offerings, increased market penetration and improved customer offtake.

Speaking on the Group’s results for the year, Chief Executive Officer and Group Managing Director of Union Bank, Emeka Emuwa said: “In 2016, we focused on executing our priorities across the different business segments, especially in the retail space, with an aggressive strategy to increase adoption of our alternate channels. Our success in this area, along with improved core interest earnings, contributed to pre-tax profit growth of 6 percent, compared to 2015.

Our research led product development strategy, coupled with an upskilled sales force and targeted marketing campaigns, propelled our customer deposit base by 15 percent, compared to 2015, and a 73% increase in new-to-bank customers.

While the operating environment remains a challenge, we are focused on our 2017 priorities which include raising Tier 1 capital to execute our growth agenda across our retail, commercial and corporate businesses, particularly transaction banking and value chain.

Commenting further on the 2016 numbers, Chief Financial Officer, Oyinkan Adewale, said: “On the back of strong customer deposits, the Bank reduced average interbank local currency borrowing by 75 percent, leading to 141bps reduction in primary cost of funds and 17 percent increase in net interest income.

The Group continued to drive cost optimisation, with cost-income-ratio declining to 66.2 percent from 70.7 percent in 2015, notwithstanding a high inflation environment. We will continue to focus on optimising cost in 2017.

“As we look to raise additional capital to execute business priorities, we will maintain our prudent approach to growing our risk assets while aggressively growing low cost deposits.”

Union Bank will also mark its centenary anniversary in 2017. The Bank said it will celebrate the 100-year milestone under three broad themes – Celebrate, Impact and Lead.

“Our 100th anniversary presents a unique opportunity for Union Bank to frame its own story, highlighting our many successes over the last century and presenting our simpler, smarter vision of banking and corporate citizenship to a new generation of customers.” The bank’s CEO said