The first quarter earnings report, which was released alongside the audited report for 2017 showed an improvement despite non-declaration of dividend.
The bank posted a profit after tax of N5.3 billion in the first quarter, compared to N4.5 billion achieved in the comparative period of 2017, an increase of 17 per cent.
Profit before tax stood at N5.4 billion from N4.7 billion recorded in first quarter of 2017, representing an increase of 16 per cent.
The three-month report showed gross earnings of N39.5 billion in first quarter of 2018 as against N34.3 billion in first quarter 2017.
Emeka Emuwa, the bank’s Chief Executive Officer, said the first quarter results reflected its 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,” Mr Emuwa said.
He said that the top-line performance was driven by improvement in net interest margins from 7.1 per cent to 8.7 per cent.
Mr Emuwa said that 18 per cent increase in non-interest income due to enhanced trading income and increased volumes on alternate banking channels contributed to the performance.
He said that interest income had grown by 14 per cent to N31.7 billion in first quarter 2018 as against N27.7 billion in first quarter 2017.
“Net interest income before impairment increased by 22 per cent to N17.8 billion in 2018 compared to N14.6 billion in 2017, 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 N6.6 billion to N7.8 billion,’’ Mr Emuwa said.
An analysis of the bank’s audited report for the year ended Dec. 31, 2017, showed that gross earnings rose by 26 per cent to N163.8 billion from N126.6 billion in 2016.
Profit before tax was largely flat at N15.5 billion in 2017, as against N15.7 billion in 2016.
Mr Emuwa said that the group’s non-performing loan ratio had improved to 14.9 per cent by March 2018, from 19.8 per cent at the beginning of 2018.
According to him, 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.
Mr Emuwa said that the bank had 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.
“We will also optimise our technology and digital platforms to deliver operational efficiency and improved customer service,” Mr Emuwa said.
Chief Financial Officer of Union Bank, Oyinkan Adewale said the first quarter results reflected the adoption of International Financial Reporting Standards (IFRS) 9, which came into effect at the start of 2018.
“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,” Mr Adewale said.
She said that despite 19 per cent and 27 per cent 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,” Mr Adewale assured.
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