Union Bank grows revenue by 10% in H1 2020

By FELIX OLOYEDE

Despite the economic challenges confronting Nigeria, Union Bank improved gross earnings were better by 10 per cent to ₦79.9bn, driven by an increase in earning assets as Interest income grew 6 per cent to ₦57.2bn, but net fee and commission income were lower by 20.90 per cent to N5.06 billion.

Also, non-interest income increased by 22 per cent to ₦22.7billion (₦18.6bn in H1 2019); driven by growth in e-business and revaluation gains, while net operating income was flat at ₦46.5billion.

Union Bank Operating expenses flat at ₦35.4bn (₦35.5bn in H1 2019) despite the inflationary pressures and COVID-19-related costs.

The bank post-tax profit declined -9.22 per cent N10.76 billion from N11.85 billion last year and pretax ticked up marginally to ₦11.3 billion compared to ₦11.2bn in H1 2019.

The lender made a provision N4.24 billion for credit losses instead N4.49 billion gain it made in that line of item.

While gross loans ticked up by 6 per cent to ₦630.5bn (₦595.3bn Dec 2019); reflecting the opportunities for risk asset creation given economic realities, customer deposits: up 12% to ₦995.2bn (₦886.3bn Dec 2019).

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 centers 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 he wider community through the ongoing COVID-19 crisis. In particular, the UnionRiseChallenge which we launched in June, recognised and rewarded customers who inspite 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 Union Bank announced the sale of its UK Subsidiary Union Bank UK Plc in 2019 and as such UBUK has been classified as a discontinued operation.”