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Union
Bank, one of Nigeria’s long-standing and most respected financial institutions,
announces its unaudited results for the nine months ended 30thSeptember 2017.
Union
Bank remains on course to deliver on its key objectives in 2017. As previously announced,
the Bank’s plans to raise fifty billion Naira (₦50 billion) in tier 1 capital through a rights issue
formally opened on September 20th and will close on October 30th.
The
capital increase supports the Bank’s short to medium term growth objectives as
it looks to re-position itself as one of Nigeria’s leading commercial banks.
The new capital will also ensure the bank maintains a strong buffer above
regulatory capital adequacy requirements.
Group Financial Highlights:
Gross
earnings: up by 16% to ₦109.5bn (₦94.8bn
in 9M 2016); fuelled mostly by 22% increase
in interest income.
Profit
before tax: down 2% to ₦13.0bn (₦13.3bn
in 9M 2016); Net Income is up 7% but operating
expenses increased 10%.
Interest
income: up 22% to ₦88.5bn
(₦72.3bn in 9M 2016);
driven mostly by 23% growth in average gross loans from ₦412bn for 9M 2016 to ₦507bn for 9M 2017.
Net
interest income after impairment: up 16% to ₦40.9bn (₦35.2bn in 9M 2016)
Impairment:
down 53% to ₦6.0bn (₦12.9bn in 9M 2016);
coverage ratio has strengthened to 203% as at 30 September 2017, from 182% as
at December 2016.
Non-interest
revenue: down 6% to ₦21.0bn
(₦22.5bn in 9M 2016);
excluding nonrecurring naira devaluation gain of ₦4.7bn in 9M 2016, 9M 2017improved by 18%.
Operating
expenses: up 10% at ₦49.0bn
(₦44.6bn in 9M 2016);
increase driven largely by
double-digit inflation amid continued capital investments in technology and
naira
Devaluation
Gross
loans: down 5% to ₦508.6bn
(₦535.8bn in Dec 2016)
Customer
deposits: up 17% to ₦767.9bn
(₦658.4bn in Dec 2016); a
customer-centric product
suite, a revamped digital platform and the launch of a new advertising campaign
have delivered 63% YTD increase in new-to-bank customers in 2017.
Commenting
on the Bank’s results for the nine month period, Emeka Emuwa, Chief Executive
Officer said:
“We
remain encouraged by the results of our customer acquisition strategy, as
customers continue to respond to our targeted market offerings and increased
brand awareness,
following the debut of a new advertising campaign to support the launch of
Union Bank’s new digital platform, including our revamped mobile banking app
and *826#, our SMS banking platform
Customer
deposits are up 17% from December 2016 to close the period at ₦767.9bn. Group Gross
Earnings, at ₦109.5bn, reflect a 16%
growth compared to the period ended 30 September 2016.
However,
a challenging macro-operating environment, characterised by double-digit
inflation, continues to create headwinds for businesses, constrict consumer
purchasing power and pressure operating expenses as well as portfolio quality.
Consequently,
core pre-tax earnings for the period were marginally lower at ₦13.0bn Compared to ₦13.3bn in 9M 2016. With
the ₦50bn capital raise
underway, we remain focused on our strategic priorities and expect this new
capital to deliver the momentum needed to accelerate the pace of our business
growth.”
Speaking
further on the numbers, Chief Financial Officer, Oyinkan Adewale said:
“The
Group’s net interest income after impairments improved significantly by 16% from
₦35.2bn to ₦40.9bn compared to the
period ended 30 September 2016. Noninterest income is down by 6% compared to 9M
2016, which included one-time revaluation gains
With
our continued focus on early problem recognition and prudent provisioning, our
coverage ratio has strengthened to 203% as at 30 September 2017, from 182% as
at December
2016.
The
impact of naira devaluation, coupled with the inflationary environment, has pressured
our cost-to-income ratio, especially as we continue to make investments in technology
critical to our long-term business strategy. We are confident that these
investments will deliver the expected cost benefits in the medium term. We also expect
improved capital adequacy and higher revenues, fuelled by N50bn of new capital.
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