By Ngozi Onyeakusi— Union Bank Plc., one of Nigeria’s longest standing and most respected financial institutions, has announced a Profit Before tax of ₦5.4bn for its unaudited financial statement for the quarter ended 31st March 2019.
Gross Earnings down by 5% to ₦37.7bn from N 39.5bn recorded in Q1 2018, driven by a lower loan book base and declining yields in the current interest rate environment.
Net Interest Income After Impairment dipped by 17% to ₦12.9bn from N 15.5bn posted in Q1 2018, following result of lower volume of earning assets.
Net Operating Income up by 3% to ₦23.9bn from N 23.3bn posted in Q1 2018.
Operating Expenses equally grew by 4% to ₦18.5bn from N17.9bn recorded in Q1 2018, driven by investments to strengthen our workforce and our treasury and transaction banking platforms
Gross Loans grew by 5% to ₦494.9bn from N 473.5bn posted Dec 2018.
Customer Deposits also increased by 1% to ₦867.2bn from N857.6bn Dec 2018, driven predominantly by low cost deposits.

Commenting on the results, Emeka Emuwa, the CEO said:

“Our focus in 2019 is to leverage our platform to deliver efficiency and seek to maximize value across all areas of the Bank.

In a low yield environment, the Group’s Non-Interest Income growth compensated for the slowdown in interest income stemming from the optimization of our loan portfolio in 2018. Consequently, Profit Before Tax (PBT) was maintained at ₦5.4 billion, consistent with Q1 2018.

Customer Deposits continue to grow, up 14% YoY to ₦867.2 billion compared to ₦759.1 billion at the end of Q1 2018, driven by a 3% increase in our low cost current and savings accounts deposit balances. Rebalancing our deposit mix is key as we push to conservatively rebuild our loan book with high quality risk assets.

In line with our priorities, we recorded a material improvement of 819% in loan recoveries with ₦2.8 billion recovered during the period. Our asset quality continues to improve, with Non-Performing Loans (NPLs) down to 7.8% from 8.7% as at December 2018.

We are employing a multi-pronged approach focused on increasing revenue and optimizing cost to ensure we deliver enhanced performance in 2019.”

Speaking on the Q1 2019 numbers, the Chief Financial
Officer, Joe Mbulu said:

“The Group’s resilience in a challenged environment is demonstrated in these first quarter numbers. While Gross Earnings declined by 5% to ₦37.7 billion from ₦39.5 billion in Q1 2018 due to loan book resolutions from the previous year, our Non-Interest Income grew by 39% from ₦7.8 billion to ₦10.8 billion driven by recoveries, credit-related fees and dividends from investments.

Operating Expenses increased marginally by 4% QoQ, reflecting adjustment to staff compensation to strengthen our workforce; and increased depreciation expenses from technology investments to strengthen our treasury and transaction banking platforms in 2018, in line with our desire to lead in the transaction banking space. With the commencement of our Long-term Efficiency Acceleration Programme (LEAP), we expect to record savings on the expense line in 2019.

Notwithstanding a challenging macro-economic backdrop, the Group improved Return on Equity to 9.3% from 6.8% as at December 2018.The Bank remains well capitalized with a Capital Adequacy Ratio (CAR) of 16.5%, which provides room to grow quality risk assets as the economy recovers.