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Tuesday, March 28, 2023

Union Bank Customer Deposits Cross N1 trillion as Pretax Profits up 2.8%

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Union Bank has released its audited financial statements for the year ended 31st December 2020 showing sustained growth in key income lines and significantly improved fundamentals notwithstanding a constrained operating environment largely due to the impact of the Covid19 pandemic.

Union Bank’s investments in technology and building a progressive work culture over the past eight years, enabled a surge in customer deposits by 27.1 percent to N1.13 trillion as pretax profits rose by 2.8 percent to N25.4 billion.

Low cost deposits were up by 17 percent, constituting 68 percent of total deposits helping to push cost of funds down by 1.4 percent.

Other financial highlights from the results show Gross earnings were down 1.9 percent to N156.9 billion (N159.9bn in FY 2019), net operating income after impairments up 8.3 percent to N103.4 billion (N95.5bn in FY 2019), net interest income before impairment up 10.1 percent to N56.9 billion (N51.7bn in FY 2019) due to reduced interest expenses.

Operating expenses were up 10 percent to N78 billion (N70.8bn in FY 2019) due to an increase in regulatory and technology expenses, gross loans rose 23.8 percent to N736.7 billion (N595.3bn in FY 2019) driven by targeted lending to key sectors of the economy.

Union Banks non-performing loans ratio fell to 4 percent from 5.8 percent (FY 2019) driven by a disciplined recoveries strategy (N7.2bn in 2020), a more robust loan book and key restructurings to support customers during the pandemic.

Commenting on the results, Emeka Emuwa, CEO said:

“The Bank has delivered a strong set of results notwithstanding the impact of COVID-19 on our operations and the wider economy, enabling the Board of Directors to continue to return value to shareholders with a proposed dividend payment for the second year in a row. This demonstrates the strong foundations we have built, as we continue to deliver against our target of becoming a leading financial institution in Nigeria.”

The pandemic accelerated trends in Union Banks customer behaviour and the banks says it has seen rapid increase in digital adoption with a 38 percent YOY increase in active users on its UnionMobile channel with total active users now at 2.9 million.

“Our UnionOne and Union360 platforms for businesses grew by 11% from 25,000 users to 27,700 users. 94% of transactions in the Bank are now done digitally, up from 89% in 2019. We also aggressively grew UnionDirect (our agent network) by 6x from 3,100 to 18,100 in line with our focus on our retail business. With our investments yielding positive results, we are well positioned as a strong leader in the retail and digital space,” Emuwa said.

Speaking on the FY 2020 numbers, Chief Financial Officer, Joe Mbulu said:

“We are pleased with both our top and bottom-line performance in 2020, in light of the impact of the pandemic and economic challenges. Significant inflationary pressures and the translation of currency depreciation drove growth in our cost base, however we maintained strong control, limiting operating expense increase to 10% (₦77.9bn from ₦70.8bn), well below the rate of inflation. Consequently, we saw marginal increase in our cost to income ratio to 75.4% from 74.1%. Our UBUK subsidiary remains classified as “Available for Sale” as the sale process continues albeit delayed due to the pandemic-induced lockdowns.”

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