Union Bank, one of Nigeria’s longest-standing and most respected financial institutions, announces its unaudited financial statements for the quarter ended June 30 2020.
Bank Financial Highlights:
- Profit before tax: sustained at ₦11.3bn (₦11.2bn in H1 2019).
- Gross earnings: up 10% to ₦79.9bn (₦72.4bn in H1 2019); driven by an increase in
- Interest income: up 6% to ₦57.2bn (₦53.8bn in H1 2019); also driven by an increase in earning assets
- Net interest income before impairment: up 21% to ₦28.0bn (₦23.2bn in H1 2019);
driven largely by a reduction in interest expense.
- Non-interest income: up 22% to ₦22.7bn (₦18.6bn in H1 2019); driven by robust growth in e-business and revaluation gains.
- Net operating income: flat at ₦46.5bn (₦46.3bn in H1 2019).
- Operating expenses: flat at ₦35.4bn (₦35.5bn in H1 2019); notwithstanding inflationary pressures and COVID-19-related costs.
- Gross loans: up 6% to ₦630.5bn (₦595.3bn Dec 2019); reflecting the opportunities for
risk asset creation is given economic realities.
- Customer deposits: up 12% to ₦995.2bn (₦886.3bn Dec 2019); reflecting increased
demand for our innovative offerings and the continued benefits of our brand growth.
Commenting on the results, Emeka Emuwa, CEO said:
“The impact of COVID-19 and associated movement restrictions on the Bank and the wider economy has been broad. The total lockdown of major commercial centres Lagos, Abuja and Ogun and partial lockdowns across the country, slowed business operations in Q2 2020.
Notwithstanding these significant headwinds, the Bank delivered a 10% increase in its top-line revenue of ₦79.9bn for H1 2020. In addition, net interest income before impairments is up 21% to N28.0bn and non-interest income up 22% to ₦22.7bn.
The slowdown limited growth in key income lines including fees and commissions and cash recoveries. However, we continue to reinforce the use of our digital channels with 90% of transactions completed digitally in H1 2020 (vs. 57% in H1 2019), which translated to a 42% growth in e-business fees from ₦2.5bn in H1 2019 to ₦3.6bn in H1 2020.
We deliberately grew our loan portfolio both in the retail and commercial/corporate banking space resulting in a 6% growth in interest income.
Given the constrained operating environment, we continue to proactively monitor our loan portfolio and support our customers in line with the Central Bank’s guidance on forbearances.
Nevertheless, growing our loan book remains a strategic focus area for us for the rest of the year as we continue to identify new opportunities emerging in the face of the pandemic.
I am pleased that the Bank has been able to support our employees, customers and the wider community through the ongoing COVID-19 crisis. In particular, the #UnionRiseChallenge which we launched in June, recognised and rewarded customers who in spite of the Covid-19 pandemic are rising to support their communities.
The Bank awarded ₦15 million to 90 recipients over a period of 4 weeks and helped amplify the great work of over 1500 community initiatives that were submitted through the campaign.
As we navigate the realities of the pandemic for the remainder of the year, we will continue to focus on increasing transaction volumes on our electronic channels, managing cost and strategic targeting of key customer segments to ensure we end the year well.
We will also continue to prioritise the health and safety of our employees and customers while finding innovative ways to meet and exceed our customer expectations.”
Speaking on the H1 2020 numbers, Chief Financial Officer, Joe Mbulu said:
“Our H1-2020 Bank numbers reflect the performance of our continuing operations for the period.
Notwithstanding increasing inflation and unexpected costs related to the changes to our operating structures during COVID-19 lockdown, we have been able to keep operating expenses under control during H1 2020.
This is indicative of the strength of our Long-Term Efficiency Acceleration Programme (LEAP) which continues to optimise key cost lines.
The continued expansion in the loan book led to enhanced interest income while lower interest rates enabled a reduction in interest expense.
We also grew customer deposits by 12% to ₦995.2bn from ₦886.4bn in December 2019 as a result of increased customer demand for our banking products and the continued positive perception of our brand. We continue to deliberately expand our loan book with a focus on key industry segments.
As impairments began to rise as a result of COVID-19 disruptions, the NPL ratio ticked up marginally to 6.3%, compared to 5.8% in December 2019, while our Capital Adequacy Ratio is at 19.2%, remaining well above the regulatory threshold.
We remain focused on achieving our 2020 objectives leveraging our solid risk management structures and executing our business priorities.”