Union Bank Profit Drops by 32% in the First 9 Months of 2022

Union Bank Plc, a Nigerian-based bank, grew gross earnings by 12.4% in the first nine months of the year to ₦140.6 billion from ₦125.2 billion reported in the first nine months of 2021.

The bank stated in its unaudited financial statement obtained by Investors King.

Net operating income after impairments stood at ₦76.3 billion, up by 7.3% from ₦71.2 billion filed in the corresponding period of 2021. This was a result of a 37% increase in interest income to N109.3 billion.

Non-interest income, however, dropped by 32.7% to ₦28.3 billion due to weak recoveries. Still, operating expenses remained healthy at ₦58.1 billion, representing a 5.2% increase when compared to ₦55.2 billion achieved in the same period of 2021.

Similarly, customer deposits grew 12.7% from ₦1.36 trillion in December 2021 to ₦1.53 trillion in September 2022. Gross loans also rose by 10.1% to ₦990.3 billion from ₦899.1 billion in December 2021.

Non-performing loan ratio declined by 50 basis points to 4.2% from 4.7% attained in the first 9 months of 2021. As expected profit for the year from continued operations inched higher by 14% to ₦18.2 billion from ₦16.0 billion in the first nine months of 2021.

Union Bank posted ₦8.796 billion loss on the disposal of subsidiary in the period. Therefore, profit before tax declined by 28.48% to ₦10.166 billion down from ₦14.215 billion reported in the same period of 2021.

Profit after tax stood at ₦9.207 billion, representing a decline of 31.5% from ₦13.443 billion achieved in the corresponding period of 2021.

Commenting on the results, Mudassir Amray, the bank CEO said: “We had a good third-quarter performance, with strong growth in profits supported by additional net interest income. Our strategy remains on track, with good delivery in all areas.

“This was reflected in more consistent top-line growth, robust lending pipelines across our businesses, and rising lending to key sectors.

“Our performance reflects the continued impact of our strategy, with gathering revenue momentum. The progress that we have made means we are in a strong position. In 9M 2022, compared to 9M 2021, the Bank’s Gross Earnings, Net Interest Income and Profit Before Tax grew by 12.4%, 59.8%, and 14% respectively.

“As we look towards the rest of the year, we retain a cautious outlook on the external risk environment believing that the lows of recent quarters are behind us. This confidence, together with our focus on building on our efficiency, expanded synergies and robust cost control, will put the Bank in a stronger position”

Also speaking on the lender’s performance was Chief Financial Officer, Joe Mbulu, who  said: “Notwithstanding our deposit book growth, our focus on optimizing our funding costs have started yielding results which has driven profitability from gross revenues to the bottom line, with higher net revenue from funds (after impairment) in the period.

“Interest Income grew by 37% to N109.3 billion as a result of higher earning assets while Non-Interest Income (NII) declined by 33% to N28.3bn compared to prior year driven by decline in recoveries by 64.5% (to N4.6 billion) during the period.

“We grew our loan book by 10% from N899.1 billion as at December 2021 to N990.1 billion as at the end of Q3 2022. Customer deposits increased by 12.7% to N1.5 trillion.

“Our non-performing loan ratio as at 9M 2022 was 4.2% while our coverage ratio remains robust at 143.2%.
Operating Expenses grew by only 5% from N55.2 billion as at 9M 2021 to N58 billion due to inflationary pressures. Consequently, our cost to income ratio decreased from 77.6% to 76.1% as at September 2022.

“The Bank remains adequately capitalized to pursue its growth ambitions with Capital Adequacy Ratio (CAR) at 15.3%.”