Union Bank gross loans down 5%; as non performing loans rises to 8.2%

DESPITE 23 percent increase recorded in gross earnings, Union Bank of Nigeria Plc has reported five percent decline in loans and advances to the customers in the first six month of 2017.
The bank in unaudited results for the half year ended 30 June, 2017 reported gross loans of N511.0 billion during the half year 2017 as against N535.8 billion reported at the end of December 2016.
Also, the Group Non Performing Loan (NPL) ratio increased to 8.2 percent. This increase reflects the impact of a 5 percent decline in gross loans over the period, without which June 2017 NPL ratio would have been 7.82 percent.
The lender gross earnings however grew by 23 percent to N73.7 billion from N60.1 billion in half year 2016.
Its profit before tax up by 6 percent at N9.5 billion compared to N8.9 billion recorded in half year 2016.
The bank’s interest income was driven largely by Naira devaluation fueled foreign currency loan book growth by 31 percent to N58.3 billion against N44.3 billion earned in half year 2016.
Union Bank’s net interest revenue before impairment increased by 2 percent to N31.7 billion compared to N30.9 billion of half year 2016, as net interest margins tightened from 9.1 percent to 7.9 percent, while net interest income grew by 19 percent to N26.3 billion from N22.2 billion in half year 2016); this was driven by a reduction in impairment charges.
The non-interest revenue of the group down 2 percent at N15.4 billion from N15.7 billion in half year 2016.
The customer deposits increased from N658.4 billion in December 2016 to N759.3 billion at the end of half year 2017, which was 15 percent increase.
Commenting on Union Bank’s half year results, Mr. Emeka Emuwa, Chief Executive Officer said: “As our centenary celebrations continue and with the launch of our N50 billion rights issue in the second half of the year, 2017 will remain a very busy year for the Bank. With our clear focus on enhancing the operational efficiency of the franchise, gross earnings grew by 23 percent in the first half of the year to N73.7 billion, from N60.1 billion in first half 2016. In a challenged economy, the group delivered profit before tax of N9.5 billion, a 6 percent growth over the corresponding period in 2016.
Despite stiff competition, our sales strategy and competitive brand continue to provide positive momentum, with Customer Deposits growing by 15 percent from December 2016 to N759.3 billion at the end of the period. In the second half of the year, our focus will centre on our rights issue launch; we will remain nimble to take advantage of emerging opportunities and while improving on service delivery to our customers.” Speaking on the first half numbers, Chief Financial Officer, Oyinkan Adewale, said: “Improved foreign exchange availability enabled us to bring our foreign currency loan book down to 44 percent of total loans, from 50 percent at the end of 2016. 18 percent customer deposit growth in the Nigerian bank allowed us to bring Loans to Deposit Ratio down to 65 percent from 82 percent at the end of 2016. Sustaining low cost deposit generation momentum, we were able to improve our low-cost deposit base to 69 percent of total deposits, from 65 percent at the end of 2016. Going into second half of 2017, we will focus on optimising funding costs and continue to keep operating expenses in check, while applying sound risk management practices to minimize impairment costs to ensure we deliver a sustainable financial performance.”