Union Bank’s Customer Deposits Rises 15% to N658.4b

By Modupe Gbadeyanka

One of Nigeria’s longest standing and most respected financial institutions, Union Bank, has announced its audited financial statements for the year ended December 31, 2016.

During the period, the lender said its customer deposits rose by 15 percent to N658.4 billion versus N570.6 billion as at December 31, 2015), thanks to new product offerings, increased market penetration and improved customer off-take by the firm.

Also, Union Bank’s pre-tax profit increased by 6 percent to N15.7 billion compared with N14.9 billion in 2015, while its gross earnings went up 8 percent to N126.6 billion against N₦117.2 billion in 2015.

In the same vein, the bank’s interest income increased 8 percent to N98 billion in contrast N90.9 billion in 2015, which was driven by loan book growth and improved bank asset yields.

However, interest expense recorded a decline by 6 percent to N33 billion versus N35.2 billion in 2015.

But its net revenue before impairment went up 14 percent to N93.6 billion against N81.9 billion in 2015.

Its non-interest revenue went up 9 percent to N28.6 billion compared with N26.2 billion in 2015, driven mostly by income from e-business channels, while the operating expenses (OPEX) advanced by 7 percent to N62 billion versus N57.9 billion in 2015 in the face of inflationary and devaluation pressures and ongoing investments in technology and network infrastructure. OPEX held flat from 2013 to 2015.

Union Bank, in the financial statements, disclosed that its gross loans grew by 38 percent to N535.8 billion compared with N388.8 billion as at December 31, 2015). It said 25 percent of the growth was the impact of devaluation on foreign currency loans.

Speaking on the results for the year, Managing Director of Union Bank, Mr Emeka Emuwa said, “In 2016, we focused on executing our priorities across the different business segments, especially in the retail space, with an aggressive strategy to increase adoption of our alternate channels.

“Our success in this area, along with improved core interest earnings, contributed to pre-tax profit growth of 6 percent, compared to 2015.

“Our research led product development strategy, coupled with an upskilled sales force and targeted marketing campaigns, propelled our customer deposit base by 15 percent, compared to 2015, and a 73 percent increase in new-to-bank customers.

“While the operating environment remains a challenge, we are focused on our 2017 priorities which include raising Tier 1 capital to execute our growth agenda across our retail, commercial and corporate businesses, particularly transaction banking and value chain.”

Also commenting further on the 2016 numbers, Chief Financial Officer, Oyinkan Adewale, said, “On the back of strong customer deposits, the Bank reduced average interbank local currency borrowing by 75 percent, leading to 141bps reduction in primary cost of funds and 17 percent increase in net interest income.

“The Group continued to drive cost optimisation, with cost-income-ratio declining to 66.2 percent from 70.7 percent in 2015, notwithstanding a high inflation environment. We will continue to focus on optimising cost in 2017. As we look to raise additional capital to execute business priorities, we will maintain our prudent approach to growing our risk assets while aggressively growing low cost deposits.”