Union Bank Recovers N8.4bn Debt as Loan to Deposit Ratio Hits 63.4%

Union Bank of Nigeria Plc recorded a mixed performance in the first nine months of this year, with the gross earnings going down by 4 percent to N117.2 billion from N122.2 billion as a result of decline in average earning asset.

However, the profit before tax rose by 5 percent to N15.6 billion from N14.9 billion, while the profit after tax increased by 4 percent to N15.2 billion over N14.7 billion in the same time of last year.

In the period under review, the lender recovered N8.4 billion debts from its customers as a result of its debt recovery drive. This brought about the drop in the bank’s non-performing loans (NPLs) ratio to 8.0 percent from 8.7 percent at year-end 2018.

Union Bank also increased its loan book by 9 percent to N565.5 billion from N519.7 billion at year-end 2018 as part of its efforts to grow its asset book by creating quality risk assets in targeted sectors of the economy.

This helped the bank to push its loan to deposit ratio to 63.4 percent from 60.6 percent as at the end of last year. The bank is on course to meeting the 65 percent December 2019 target set by the Central Bank of Nigeria (CBN) for commercial banks in the country.

In addition, the customer deposits improved during the period by 4 percent to N892.9 billion from N857.6 billion as at December 2018, reflecting the company’s continuing acquisition of low-cost deposits driven by strengthened brand affinity.

But despite these, the interest income of Union Bank went down by 2 percent to N90.0 billion from N91.5 billion, while the non-interest income depreciated by 12 percent to N27.1 billion from N30.7 billion as a result of reduced market volatility in the year, which had an impact on trading income.

Furthermore, the net operating income reduced by 2 percent to N71.4 billion from N72.7 billion, while the financial institution’s sustained cost optimisation scheme led to the 3 percent drop in operating expenses to N56.2 billion from N58.0 billion.

CEO of Union Bank, Mr Emeka Emuwa, while commenting on the results, said, “Our continued focus on consumer centric service and product propositions is yielding solid results, contributing to a 28 percent growth in our electronic channels fee income which is at N5.6 billion for the period. Our debt recovery drive continues to record successes with N8.4 billion of recoveries year-to-date.

“In line with our stated business objectives, we are continuing to grow our asset book by creating quality risk assets in targeted sectors. This has led to a 9 percent growth in our loan portfolio to N566.5 billion compared with N519.7 billion at year-end 2018.”

“Going into the rest of the year, our ambition remains to deliver superior customer experience across all customer touchpoints,” the bank executive said further.

On his part, Chief Financial Officer of Union Bank, Mr Joe Mbulu, stated that, “While we had a slight decline in gross earnings for the group from N122.2 billion in 2018 to N117.2 billion, our efficiency initiatives including the deployment of Robotics Process Automation as well as our cost optimisation programme ensured we delivered 4 percent growth in profit after tax, recording N15.2 billion compared with N14.7 billion in the prior year period.

“Our operating expenses reduced by 3 percent to N56.2 billion from N58.0 billion in 9M 2018 and the bank’s customer-related non-interest revenue drivers remained strong with net fee and commission income growing 10 percent to N9.5 billion from N8.7 billion for the corresponding period in 2018.

“We continue to maintain adequate levels of capital with our Capital Adequacy Ratio (CAR) at 17.8 percent which is above the regulatory threshold. Non-Performing Loans (NPLs) declined to 8.0 percent from 8.7 percent as at year-end 2018.”