Union Bank H1 2021 Earnings, Profit Stagger

By Dipo Olowookere

It was a bumpy first six months of the year for Union Bank of Nigeria Plc, according to its financial statements for the period ended June 30, 2021, released to the stock exchange on Thursday.

The financial institution suffered a 6.8 per cent in gross earnings, which stood at N76.3 billion in contrast to N81.9 billion and this was attributed to the low-interest environment.

From the results, it was discovered that the interest income of the company went down to N47.8 billion from N57.4 billion in the first six months of 2020.

Business Post observed that the interest income was badly affected by lower earnings from investment securities (N5.1 billion in H1 2021 versus N14.7 billion in H1 2020).

However, the net fee and commission income increased to N6.6 billion from N5.1 billion, buoyed by a rise in credit-related fees and commissions, commission on LCs, invisible trades and guarantees, and account maintenance fees.

The financial statements showed that the net trading income generated by the lender reduced to N4.1 billion from N8.9 billion, while the other operating income dropped to N3.9 billion from N4.2 billion.

But the non-interest income improved in the first half of the year to N27.8 billion from N22.7 billion as a result of debt recoveries just as the operating income jumped to N48.2 billion from N46.7 billion.

A slash in wages and salaries contributed to the decline in the personnel costs recorded by the lender in H1 2021, which stood at N14.7 billion as against N15.6 billion in the same period of last year while other operating expenses rose to N18.4 billion from N16.8 billion, with the total expenses at N36.9 billion, higher than N35.5 billion in H1 2020.

Union Bank said its pre-tax profit for the period was N10.3 billion, lower than N11.6 billion in the same period of 2020, while the post-tax profit went down to N9.8 billion from N11.1 billion.

A look at the balance sheet showed that the total assets were relatively flat at N2.2 trillion year-to-date despite an increase in loans and advances to customers, investment securities and others.

However, the total liabilities increased to N1.9 trillion from N1.8 trillion as a result of the increase in deposits from customers, which hit N1.2 trillion from N1.1 trillion in FY 2020.

In the period under review, the lender cut down its non-performing loans ratio to 4.3 per cent from 6.4 per cent in the same period of last year, while its capital position remains strong with a Capital Adequacy Ratio (CAR) of 16.1 per cent and a coverage ratio of 166 per cent.