By Dipo Olowookere
Despite the threats faced by Union Bank Plc in the first half of 2020 as a result of the global health crisis caused by COVID-19, it delivered a near double-digit growth in its gross earnings.
In the financial statements of the company for the period ended June 30, 2020, released today, the lender increased its earnings by 7.8 per cent to N81.9 billion from N76.0 billion in the same period of 2019.
This growth was influenced by an increase in earning assets as well as the use of Union Bank’s digital channels by customers during the lockdown in Nigeria.
On March 30, 2020, the federal government put Lagos, Abuja and Ogun State on total lockdown till early May, while some other states were put on partial lockdown.
During this period, banks and other businesses were not allowed to operate because the government was making efforts to control the spread of the virus, which has now infected over 5 million people worldwide.
But despite the lockdown, Union Bank’s half-year earnings grew because customers relied on its digital platforms to carry out their transactions, though earnings in Q2 slightly dropped to N38.0 billion from N38.3 billion in Q2 2019.
According to the lender, 90 per cent of transactions by its customers were completed digitally in the first half of the year compared with 57 per cent in the comparative period of 2019, translating to a 42 per cent growth in e-business fees from N2.5 billion in H1 2019 to N3.6 billion in H1 2020.
In the first six months of this year, Union Bank recorded a 6.3 per cent rise in interest income (N57.4 billion versus N54.0 billion in H1 2019) and this was also driven by the increase in earning assets.
In addition, the net interest income before impairment went up by 20.4 per cent to N28.3 billion from N23.5 billion due to the reduction in interest expense (N29.1 billion in H1’20 versus N30.5 billion in H1’19, while a robust growth in e-business and revaluation gains drove the non-interest income higher by 24.0 per cent to N22.7 billion from N18.3 billion in H1 2019.
It was observed that the net operating income increased marginally by 0.86 per cent to N46.7 billion from N46.3 billion, while the operating expenses slightly went down to N35.5 billion from N35.6 billion as a result of the lockdown in the second quarter of the year as most employees of the company worked from home.
Business Post observed that the bottom line of the results was not too impressive as the profit before tax grew by 2.7 per cent to N11.5 billion from N11.2 billion in H1 2019, while the profit after tax depreciated by 9.2 per cent to N10.8 billion from N11.9 billion.
Due to the increased demand for its innovative offerings and the continued benefits of its brand growth, Union Bank recorded a 12.3 per cent year-to-date rise in customer deposits to N995.0 billion from N886.3 billion in FY 2019.
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