Union Bank, one of Nigeria’s longest standing and most respected financial institutions, announces its unaudited financial statements for the period ended June 30 2018.
Group Financial Highlights:
Profit before tax: up 23% to ₦11.7bn (₦9.5bn in H1 2017).
Gross earnings: up 16% to ₦83.3bn (₦72.1bn in H1 2017), driven by a 10% increase in interest income and 37% increase in non-interest income.
Interest income: up 10% to ₦62.2bn (₦56.6bn in H1 2017).
Net interest income before impairment: up 14% to ₦34.4bn(₦30.1bn in H1 2017); driven by an improvement in net interest margins from 7.9% to 8.2% on the back of lower cost of funds.
Non-interest income: up 37% to ₦21.1bn (₦15.4bn in H1 2017); driven by enhanced treasury trading income, recoveries and 311% growth in alternate channel revenues.
Net operating income: up 22% to ₦50.9bn (₦41.9bn in H1 2017).
Operating expenses: up 21% to ₦39.2bn (₦32.4bn in H1 2017); largely due to a 25% increase in regulatory levies from the NDIC and AMCON as well as some one-off items.
Gross loans: down 9% to ₦508.5bn (₦560.7bn Dec 2017) due to successful recovery/collection efforts and the write-off of some fully provisioned non-performing loans.
Customer deposits: up 3% to N826.7bn (N802.4bn Dec 2017); reflects 66% increase in foreign currency deposits and the optimization of our local currency deposit book towards low-cost deposits.
Commenting on the results, Emeka Emuwa, CEO said:
“In the first half of the year, we have continued to see positive results from our efficiency and productivity drive. Across all our business lines, we witnessed strong underlying performance, translating into improved earnings. We continue to focus on the recovery of non-performing loans. With the resolution in Q2 2018 of the large real estate exposure which was impaired in December 2017, the Group NPL ratio is down to 10.8% from 14.9% at 31 March 2018 and 19.8% at 31 December 2017. The Group continues to demonstrate its ability to deliver strong results notwithstanding a competitive and challenging operating environment.
Gross earnings rose by 16% to N83.3 billion from N72 billion in H1 2017, underpinned by improved Net Interest Margins (NIM), robust treasury trading income, recoveries and alternate channel revenues, on the back of increased customer adoption. Our Profit Before Tax (PBT) grew by 23% compared to H1 in 2017.
In the second half of the year, we will continue to focus on productivity, leveraging our
enhanced platform to deliver best-in-class services to our customers and taking
advantage of targeted opportunities across business lines and geographies.”
Speaking on the H1 2018 numbers, Chief Financial Officer, Oyinkan Adewale said:
“With low-cost deposits now accounting for 70% of total deposits, up from 67% as at
December 2017, our cost of funds fell in H1 2018. Consequently, the Group NIM has
improved from 7.9% in H1 2017 to 8.2% in the period. Our foreign currency deposits
are up 66%, compared with December 2017; and up 40% compared with March 2018,
as we continued to optimize our balance sheet.
We are pleased that for the first time since 2012, the Group’s retained earnings moved
from a negative to a positive position, thus eliminating a major technical impediment
to the payment of dividends.
Operating Expenses for the period were affected by some one-off items, as well as a
combined 25% increase in NDIC premium and AMCON levy. For the rest of the year,
we will intensify our cost rationalization initiatives.
The Bank remains well capitalized with Capital Adequacy Ratio at 18.2%.”
Group H1 2018 Financial Summary
Balance Sheet (in billions of Naira) June 2018 Dec 2017 Change
Total Assets 1,471.1 1,455.5 1%
Gross Loans & Advances 508.5 560.7 (9%)
Customer Deposits 826.7 802.4 3%
Shareholders’ Funds 290.4 345.7 (16%)
Number of shares in issue (billions) 29.12 29.12 Flat
Ratios
Coverage Ratio (incl. RRR) 97% 103% (6%)
Loan to Deposit Ratio 61.5% 69.9% (8.4%)
Net Asset Value per share ₦9.97 ₦11.87 (₦1.90)
Non-Performing Loan Ratio 10.8% 19.8% (9.0%)
Income Statement (in billions of Naira) H1 2018 H1 2017 Change
Gross Earnings 83.3 72.1 16%
Net Interest Income 34.3 30.1 14%
Non-Interest Income 21.1 15.4 37%
Credit /other Impairment charge 4.6 3.7 26%
Operating Expenses 39.2 32.4 21%
Profit Before Tax 11.7 9.5 23%
Profit After Tax 11.5 9.2 25%
Ratios
Net Interest Margin 8.2% 7.9% 0.3%
Cost of Funds 5.7% 6.1% (0.4%)
Cost to Income Ratio 70.7% 71.2% (0.5%)
Cost of Risk 1.7% 1.4% 0.3%
Return on Equity 7.3% 6.6% 0.7%
Return on Tangible Equity 10.4% 10.1% 0.3%
Return on Assets 1.6% 1.5% 0.1%
Earnings Per Share 38k 54k (16k)
Bank H1 2018 Financial Summary
Balance Sheet (in billions of Naira) June 2018 Dec 2017 Change
Total Assets 1,321.0 1,334.9 (1%)
Gross Loans & Advances 478.7 531.8 (10%)
Customer Deposits 789.2 796.7 (1%)
Shareholders’ Funds 266.5 321.4 (16%)
Number of shares in issue (billions) 29.12 29.12 flat
Ratios
Coverage Ratio (incl. RRR) 107% 103% 4%
Loan to Deposit Ratio 60.7% 66.8% (6.1%)
Net Asset Value per share ₦9.2 ₦11.0 (₦1.8)
Non-Performing Loan Ratio 10.2% 20.8% (10.6%)
Income Statement (in billions of Naira) H1 2018 H1 2017 Change
Gross Earnings 81.0 69.4 17%
Net Interest Income 32.1 28.1 14%
Non-Interest Income 21.6 14.9 45%
Credit/other Impairment charge 4.3 3.6 21%
Operating Expenses 37.3 30.8 21%
Profit Before Tax 12.1 8.7 40%
Profit After Tax 12.0 8.6 40%
Ratios
Net Interest Margin 9.2% 8.8% 0.4%
Cost of Funds 6.0% 6.6% (0.6%)
Cost to Income Ratio 69.4% 71.5% (2.1%)
Cost of Risk 1.7% 1.5% 0.2%
Return on Equity 8.2% 6.7% 1.5%
Return on Tangible Equity 12.2% 10.7% 1.5%
Return on Assets 1.8% 1.5% 0.3%
Earnings Per Share 41k 51k (10k)
For the detailed Profit and Loss Account, Balance Sheet, Cash flow statement and notes to the
accounts, please visit
www.unionbankng.com
