Economy
Union Bank Grows PAT by 17% to N5.3b in Q1 2018
By Dipo Olowookere
One of the old generation financial institutions in the country, Union Bank of Nigeria Plc, has recorded a 17 percent growth in its profit after tax in the first quarter of 2018.
In its audited financial statements for the quarter ended March 31, 2018 announced on Thursday, the lender said its PAT appreciated to N5.3 billion from N4.5 billion in the corresponding period of last year, just as the profit before tax closed at N5.4 billion as at March 31, 2018 in contrast to N4.7 billion in Q1 2017.
Also, the gross earnings went up by 15 percent to N39.5 billion from N34.3 billion in Q1 2017, driven by improvement in net interest margins from 7.1 percent to 8.7 percent and 18 percent increase in non-interest income due to enhanced trading income and increased volumes on alternate banking channels.
Furthermore, interest income increased by 14 percent to N31.7 billion from N27.7 billion in Q1 2017 buoyed by improved yields on loans and government securities.
In addition, the firm’s net interest income before impairment rose by 22 percent to N17.8 billion from N14.6 billion in Q1 2017, driven by 14 percent increase in interest income and a lower 6 percent increase in interest expense.
It was also revealed in the statements that the non-interest income went up by 18 percent to N7.8 billion from N6.6 billion in Q1 2017, driven by a combination of trading income and alternate channel revenues, while the net operating income increased by 11 percent to N23.3 billion from N20.9 billion in Q1 2017.
Furthermore, the operating expenses jumped by 10 percent to N17.9 billion from N16.3 billion in Q1 2017, largely due to regulatory levies from the NDIC and AMCON.
However, the gross loans went down by 12 percent to N495.5 billion from N560.7 billion as at December 2017 as a result of collection efforts and the write-off of some non-performing loans.
During the period under review, the customer deposits of Union Bank went down by 5 percent to N759.1 billion from N802.4 billion in December 2017 as the lender optimised the deposit book towards lower-cost deposits.
It was observed that there was a 68 percent increase in new-to-bank accounts when compared with Q1 2017, highlighting customer acceptance of new products and increasing brand penetration.
There was also a 90 percent increase in volume of funds transfer transactions on Union Bank’s alternate channels, highlighting efficiencies gained from technology investments, which are driving increased customer adoption.
Commenting on the results, the chief executive of Union Bank, Mr Emeka Emuwa, stated that, “In 2018, we renewed our focus on driving efficiency and productivity across the entire organization.
“The objective is to ensure we fully leverage our resources including human, technology and new capital in order to maximize our bottom line.
“While we are just in the early stages of this drive, we are already starting to see positive results. In the first quarter, our Profit Before Tax grew by 16 percent compared to the same quarter in 2017. Gross earnings, bolstered by improved asset yields, strong treasury trading and revenue from our alternate channels, which is steadily seeing increasing customer adoption, are also up by 15 percent to N39.5 billion against N34.3 billion Q1 2017.
“Our Group Non-Performing Loan Ratio is down to 14.9 percent from 19.8 percent at the end of 2017.
“We continue to maintain aggressive focus on our impaired loans and we expect to resolve some large exposures in the course of the year, which will further drive down the ratio. We are pushing strongly on debt recovery efforts across board including initiating or continuing legal action where necessary.
“For the first half of the year, we will continue to hone initiatives around our productivity drive, focusing our people on targeted opportunities across regions and optimising our technology and digital platforms to deliver operational efficiency and improved customer service.
Also speaking on the Q1 2018 numbers, Chief Financial Officer of the bank, Oyinkan Adewale said, “The first quarter numbers reflect the adoption of International Financial Reporting Standards (IFRS) 9, which came into effect at the start of 2018. We are pleased that the Bank’s regulatory risk reserve was adequate to absorb the impact of the new accounting rules.
“Our Capital Adequacy Ratio (CAR) remains robust at 17.9 percent in spite of the impact of IFRS 9 on impairments. Liquidity ratio is at 39.4 percent, well above the minimum requirement, while Net Interest Margin improved to 8.73 percent from 7.14 percent in Q1 2017.
“Profit After Tax (PAT) rose 17 percent to N5.3 billion compared to N4.5 billion recorded in Q1 2017. Notwithstanding a 19 percent and 27 percent increase in our AMCON levy and NDIC premium respectively, our operating expenses increased by only 10 percent given the continued focus on optimising operating costs.
“We continue to proactively in managing the risks in our business as we pursue targeted opportunities identified for growth.”
By Dipo Olowookere
The local stock market firmed up by 1.13 per cent on Friday as appetite for Nigerian stocks remained strong.
Investors reacted well to the 2026 budget presentation of President Bola Tinubu to the National Assembly yesterday, especially because of the more realistic crude oil benchmark of $64 per barrel compared with the ambitious $75 per barrel for 2025. This year, prices have been between $60 and $65 per barrel.
Business Post observed profit-taking in the commodity and energy sectors as they respectively shed 0.14 per cent and 0.03 per cent.
But, bargain-hunting in the others sustained the positive run, with the consumer goods index up by 3.82 per cent.
Further, the industrial goods space appreciated by 1.46 per cent, the banking counter improved by 0.08 per cent, and the insurance industry gained 0.04 per cent.
As a result, the All-Share Index (ASI) increased by 1,694.33 points to 152,057.38 points from 150,363.05 points and the market capitalisation chalked up N1.080 trillion to finish at N96.937 trillion compared with Thursday’s closing value of N95.857 trillion.
A total of 34 shares ended on the advancers’ chart, while 24 were on the laggards’ log, representing a positive market breadth index and bullish investor sentiment.
Austin Laz gained 10.00 per cent to close at N2.42, Union Dicon also jumped 10.00 per cent to N6.60, Tantalizers increased by 9.80 per cent to N2.69, Aluminium Extrusion improved by 9.78 per cent to N12.35, and Champion Breweries grew by 9.71 per cent to N16.95.
Conversely, Sovereign Trust Insurance dipped by 7.42 per cent to N3.87, Royal Exchange lost 6.84 per cent to trade at N1.77, Omatek slipped by 6.84 per cent to N1.09, Eunisell depreciated by 5.88 per cent to N80.00, and Eterna dropped 5.63 per cent to close at N28.50.
Yesterday, traders transacted 1.5 billion units worth N21.8 billion in 25,667 deals compared with the 839.8 million units sold for N32.8 billion in 23,211 deals in the preceding session, showing a surge in the trading volume by 76.61 per cent, an uptick in the number of deals by 10.58 per cent, and a shrink in the trading value by 33.54 per cent.
By Adedapo Adesanya
Three stocks stretched the bearish run of the NASD Over-the-Counter (OTC) Securities Exchange by 1.21 per cent on Friday, December 19, with the market capitalisation giving up N26.01 billion to close at N2.121 billion compared with the N2.147 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) dropping 43.47 points to 3,546.41 points from 3,589.88 points.
The trio of FrieslandCampina Wamco Nigeria Plc, Central Securities Clearing System (CSCS) Plc, and NASD Plc overpowered the gains printed by four other securities.
FrieslandCampina Wamco Nigeria Plc lost N6.00 to sell at N54.00 per unit versus N60.00 per unit, NASD Plc shrank by N3.50 to N58.50 per share from N55.00 per share, and CSCS Plc depleted by N2.91 to N33.87 per unit from N36.78 per unit.
On the flip side, Air Liquide Plc gained N1.01 to close at N13.00 per share versus N11.99 per share, Golden Capital Plc appreciated by 70 Kobo to N7.68 per unit from N6.98 per unit, Geo-Fluids Plc added 39 Kobo to sell at N5.50 per share versus N5.11 per share, and IPWA Plc rose by 8 Kobo to 85 Kobo per unit from 77 Kobo per unit.
During the trading day, market participants traded 1.9 million securities versus the previous day’s 30.5 million securities showing a decline of 49.3 per cent. The value of trades went down by 64.3 per cent to N80.3 million from N225.1 million, but the number of deals jumped by 32.1 per cent to 37 deals from 28 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc finished the session as the most active stock by value on a year-to-date basis with 5.8 billion units valued at N16.4 billion, followed by Okitipupa Plc with 178.9 million units transacted for N9.5 billion, and MRS Oil Plc with 36.1 million units traded for N4.9 billion.
The most active stock by volume on a year-to-date basis was still InfraCredit Plc with 5.8 billion units worth N16.4 billion, trailed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.7 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Adedapo Adesanya
It was not a good day for the Nigerian Naira at the two major foreign exchange (FX) market on Friday as it suffered a heavy loss against the United States Dollar at the close of transactions.
In the black market segment, the Naira weakened against its American counterpart yesterday by N10 to quote at N1,485/$1, in contrast to the N1,475/$1 it was traded a day earlier, and at the GTBank forex counter, it depreciated by N2 to settle at N1,467/$1 versus Thursday’s closing price of N1,465/$1.
In the Nigerian Autonomous Foreign Exchange Market (NAFEX) window, which is also the official market, the nation’s legal tender crashed against the greenback by N6.65 or 0.46 per cent to close at N1,464.49/$1 compared with the preceding session’s rate of N1,457.84/$1.
In the same vein, the local currency tumbled against the Euro in the spot market by N2.25 to sell for N1,714.63/€1 compared with the previous day’s N1,712.38/€1, but appreciated against the Pound Sterling by 73 Kobo to finish at N1,957.30/£1 compared with the N1,958.03/£1 it was traded in the preceding session.
The market continues to face seasonal pressure even as the Central Bank of Nigeria (CBN) is still conducting FX intervention sales, which have significantly reduced but not remove pressure from the Naira. Also, there seems to be reduced supply from exporters, foreign portfolio investors and non-bank corporate inflows.
President Bola Tinubu on Friday presented the government’s N58.47 trillion budget plan aimed at consolidating economic reforms and boosting growth.
The budget is based on a projected crude oil price of $64.85 a barrel and includes a target oil output of 1.84 million barrels a day. It also projects an exchange rate of N1,400 to the Dollar.
President Tinubu said inflation had plunged to an annual rate of 14.45 per cent in November from 24.23 per cent in March, while foreign reserves had surged to a seven-year high of $47 billion.
Meanwhile, the cryptocurrency market was dominated by the bulls but it continues to face increased pressure after million in liquidations in previous session over accelerating declines, with Dogecoin (DOGE) recovering 4.2 per cent to trade at $0.1309.
Further, Ripple (XRP) appreciated by 3.9 per cent to $1.90, Cardano (ADA) rose by 3.5 per cent to $0.3728, Solana (SOL) jumped by 3.4 per cent to $126.23, Ethereum (ETH) climbed by 2.9 per cent to $2,982.42, Binance Coin (BNB) gained 2.0 per cent to sell for $853.06, Bitcoin (BTC) improved by 1.7 per cent to $88,281.21, and Litecoin (LTC) soared by 1.2 per cent to $76.50, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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