Union Bank reports 8.8% drop in profit before tax to N6.4bn
Union Bank of Nigeria has released its unaudited financial statements for the first quarter ended March 31, 2022 with profit before tax dropping by 8.8 per cent to N6.4billion from N7billion reported in the first quarter ended March 31, 2021.
The lender on the Nigerian Exchange Limited (NGX) announced gross earnings that grew by 18per cent to N42.9billion from N36.4billion in Q1 2022, driven by strong earning assets from on-lending to key sectors in the Nigerian economy. Net interest income after impairments: went up 27per cent to N12.9billion from N10.1billion reported in Q1 2021.
Operating expenses: also grew by 3.9per cent to N18billion from N17.3billion in Q1 2021, notwithstanding high inflationary environment. Gross loans went down 1.8per cent at N882.9billion (N899.1billion in Dec 2021).
Non-Performing Loan (NPL) ratio was flat at 4.3per cent.
Customer deposits: down 3.5per cent at N1.31trillion (N1.36trillion in Dec 2021); following the pay down expensive time deposits
Commenting on the results, CEO, Union Bank of Nigeria, Mr. Emeka Okonkwo said: “In 2022, we renewed our focus on turbocharging productivity and ensuring we fully leverage the strength of our digital channels, regional network and talent to maximise the bottom line.
“Our efforts are gaining momentum and notwithstanding a challenging economic climate in Q1 2022, our Net Interest Income after impairment grew by 27per cent compared to the same quarter in 2021 from N10.1 billion to N12.9 billion. Gross Earnings are also up by 18per cent to N42.9 billion against N36.4 billion in Q1 2021.
“This was bolstered by improved asset yields, treasury trading income and revenues from our alternate channels. We are steadily seeing increasing customer adoption with a 36per cent YoY increase in active users on UnionDirect, our agency banking network, and increasing transaction volumes with a 20per cent YoY growth across our digital channels.
“Interest Income grew by 41per cent from N22.2 billion to N31.4 billion as our earnings asset base expanded with a more viable loan portfolio.
“Our NPL ratio is flat at 4.3per cent (from December 2021), well within the regulatory limit, while cost to income ratio dropped from 79.4per cent in December 2021 to 73.9per cent in March 2022. We will continue to drive cost optimization to ensure consistent improvement in efficiencies. With a Capital Adequacy Ratio (CAR) of 15.6%, our capital position remains strong.
“On the innovation side, we launched SpaceNXT – a purpose-built hub created to encourage innovation and foster collaboration within the Nigerian tech ecosystem. This remains a space where Union Bank desires to maintain a leading position.
“For the rest of H1 2022, we will continue to focus on driving productivity, mining targeted opportunities across regions and optimising our digital platforms to deliver improved customer service and acquisition.””
Speaking on the Q1 2022 numbers, Chief Financial Officer, Mr. Joe Mbulu also a statement said: “The Bank continued to demonstrate resilience in our Q1 2022 results.
“Headline Gross Earnings increased by 18per cent to N42.9 billion from N36.4 billion in Q1 2021. Net interest income after impairment charges grew by 27per cent driven by 41per cent increase in Interest Income to N31.4 billion from N22.2 billion in Q1 2021. Non-Interest Income declined by 19.1per cent from N14.2 billion to N11.4 billion driven by higher foreign currency revaluation loss.
“Operating Expenses increased marginally by 3.9per cent QoQ, as a result of higher regulatory, diesel, and software expenses. In Q2 2022, we will focus on optimising operating costs by intensifying measures to mitigate the impact of high inflation.
“We will also continue to drive for a more efficient balance sheet by paying down expensive deposits and pricing our risk assets better.”
