Union Bank increases Non Performing Loan by 34.29 % in nine months  

union-1Union Bank of Nigeria Plc has declared 34.29 per cent increase in the Non-Performing Ratio (NPL) for the nine months ended 30 September, 2016.

The lender in the result released to the Nigerian Stock Exchange (NSE) in Lagos declared 9.4 per cent NPL for nine months 2016 from 7 per cent as at December 2015.

According to Investopedia, a Non-Performing Loan is the sum of borrowed money upon which the debtor has not made his scheduled payments for at least 90 days. A nonperforming loan is either in default or close to being in default. Once a loan is nonperforming, the odds that it will be repaid in full are considered to be substantially lower.

The increase in NPL put the bank in more danger as its profit after tax remain at the same value of N13.1 billion when compared to nine month of 2015.

Although Union Bank Plc recorded a lean increase of N6 billion represented 7 per cent in the gross earnings for the nine months 2016 from N85.4 billion to N91.4 billion.

Its interest income also rose by 6 per cent from N65.3 billion it made in nine months period of 2015 to end current quarter with N69.2 billion.

Net revenue before impairment increased by 20 per cent to N46.4 billion from N38.8 billion in nine months 2015 which was as a result of 6 per cent interest income growth and 14 per cent interest expenses growth. Its net interest margin grew from 8.76 per cent to 9.97 per cent.

Union Bank of Nigeria customer deposits surged by 9 per cent from N569.1 billion to N618.30 billion.

Commenting on the bank’s results for the nine month period, Chief Executive Officer of Union Bank Nigeria Plc, Emeka Emuwa said, “Our core pre-tax profits are up 27 per cent to N12.4 billion from N9.8 billion during the same period in 2015, fuelled largely by interest income and our thriving retail business. We are encouraged by this performance which comes in the face of a recessionary environment, increased impairments and headwinds in our trade business due to scarcity of foreign exchange.

Our steady effort to build a low cost, customer centric retail business over the past 18 months is demonstrating results and continues to win us a new, growing retail customer base, as well as industry recognition with our recent Business Day Award for the Most Improved Retail Bank in Nigeria.

While the operating environment remains a challenge, we will continue to focus on executing our strategy, defending our loan book and adhering to prudent risk management principles.”

Speaking further on the bank’s number, Chief Financial Officer, Oyinkan Adewale said, “Our revenue are up across board and the bank’s asset yields improved from 14.2 per cent to 16.1 per cent when compared to same period in 2015. Our non-interest revenue is up 27 per cent, excluding one-time gains, on the back of treasury and channel banking revenues in the retail business.

We continue to manage our cost of funds, resulting in 14 per cent reduction in interest expenses year on year, notwithstanding a 9 per cent growth in customer deposits and 25 per cent increase in medium term borrowings.

Our cost optimization initiatives continue to yield good results; cost to income ratio has improved to 62 per cent from 70 per cent in the previous year. Cost to income is buoyed by income and operating expenses in line with expectations in spite of inflationary and devaluation pressures. We will continue to implement our cost discipline initiatives across the bank to stay within our cost targets.”