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 Adedapo Adesanya
Four securities weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.95 per cent on Friday, erasing N41.17 billion from the bourse, which had its market capitalisation at N2.567 trillion compared with the previous session’s N2.618 trillion.
In the same vein, the NASD Unlisted Security Index (NSI) decreased at the close of business by 85.28 points to 4,277.07 points from 4,362.32 points.
The price decliners were led by 11 Plc, which gave up N20.50 to sell at N200.50 per share compared with the preceding day’s N221.00 per share, FrieslandCampina Wamco Nigeria Plc dropped N16.94 to close at N155.20 per unit versus Thursday’s closing price of N172.14 per unit, Central Securities Clearing System (CSCS) Plc went down by N2.11 to N84.68 per share from N86.79 per share, and Afriland Properties Plc lost 11 Kobo to end at N16.74 per unit, in contrast to the N16.85 per unit it closed a day earlier.
During the trading day, the value of transactions jumped by 172.1 per cent to N29.9 million from the preceding session’s N10.9 million, and the volume of trades soared by 136.5 per cent to 955,096 units from the previous 403,901 units, while the number of deals went down by 11.4 per cent to 31 deals from 35 deals.
Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 68.6 million units sold for N4.7 billion.
GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Dipo Olowookere
The last trading session of this week on the floor of the Nigerian Exchange (NGX) Limited ended on a negative note, with a 0.66 per cent loss on Friday.
This was influenced by sustained selling pressure and cautious trading, which forced investors into profit-taking.
Data obtained by Business Post showed that the energy sector fell by 4.66 per cent, the insurance counter dipped by 2.23 per cent, the consumer goods index depreciated by 0.96 per cent, and the banking segment shed 0.28 per cent, while the industrial goods space remained unchanged.
At the close of business, the All-Share Index (ASI) of Nigeria’s stock exchange went down by 1,531.81 points to 232,049.02 points from 233,580.83 points, and the market capitalisation dropped N983 billion to settle at N148.905 trillion compared with Thursday’s N149.888 trillion.
Aradel was the worst-performing equity after it lost 10.00 per cent to close at N1,417.50. International Energy Insurance slipped by 9.95 per cent to N5.79, Trans-Nationwide Express depreciated by 9.89 per cent to N3.28, eTranzact crashed by 9.79 per cent to N14.75, and UPDC slumped by 9.72 per cent to N28.12.
The best-performing equity for the day was Universal Insurance, which gained 6.32 per cent to close at N1.01, McNichols grew by 5.52 per cent to N8.60, Linkage Assurance expanded by 4.67 per cent to N1.57, NGX Group appreciated by 4.35 per cent to N120.00, and Transcorp increased by 3.62 per cent to N41.50.
As look at the activity level indicated that investors traded 388.7 million stocks worth N18.4 billion in 44,631 deals compared with the 393.7 million stocks valued at N19.2 billion executed in 45,813 deals a day earlier, representing a decline in the trading volume, value, and number of deals by 1.27 per cent, 4.17 per cent, and 2.58 per cent, respectively.
By Adedapo Adesanya
The Naira recorded a loss of 82 Kobo or 0.06 per cent against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 26, exchanging at N1,380.93/$1, in contrast to the previous day’s rate of N1,380.11/$1.
Equally, the domestic currency further weakened against the Pound Sterling in the official FX market yesterday by N6.06 to settle at N1,824.90/£1 versus the preceding session’s N1,818.84/£1, and lost N10.74 on the Euro to sell at N1,577 .58/€1 versus N1,566.84/€1.
At the GTBank forex counter, the Naira depreciated against the greenback during the session by N4 to close at N1,387/$1, in contrast to Thursday’s value of N1,383/$1, and at the parallel market, it was unchanged at N1,395/$1.
Interbank FX activity among financial institutions has fluctuated amid a sharp slowdown in forex market interventions by the Central Bank of Nigeria (CBN), as it allows demand and supply to move the market.
Also, a stronger greenback has generally put significant pressure on emerging-market currencies.
Nigeria has accessed the first tranche of a proposed $5 billion derivatives financing arrangement with First Abu Dhabi Bank PJSC, the largest lender in the United Arab Emirates (UAE).
The $5 billion facility, approved by the National Assembly earlier this year, is part of the federal government’s plan to diversify external financing sources and reduce borrowing costs. Structured as a Total Return Swap with First Abu Dhabi Bank, proceeds are earmarked for refinancing debt and supporting infrastructure financing.
If the proceeds are brought into the country through the official FX market, the transaction will increase the currency reserves or Dollar liquidity.
At the cryptocurrency market, Solana (SOL) grew by 2.2 per cent to $71.92, Cardano (ADA) gained 1.1 per cent to trade at $0.1474, Ripple (XRP) also appreciated by 1.1 per cent to $1.05, Dogecoin (DOGE) expanded by 0.9 per cent to $0.0755, and Ethereum (ETH) improved by 0.4 per cent to $1,578.84.
On the flip side, TRON (TRX) slid 0.6 per cent to $0.3203, Binance Coin (BNB) slumped by 0.3 per cent to $564.33, and Bitcoin fell by 0.2 per cent to $60,219.37, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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