Union Bank of Nigeria (UBN) Plc reported growth in the topline but profit dropped in the first quarter.
Key extracts of the interim report and accounts for the first quarter ended March 31, 2022 showed that gross earnings rose to N42.9 billion in 2022 as against N36.4 billion in first quarter 2021. The topline growth was driven by strong earning assets from on-lending to key sectors in the economy
- Net interest income after impairments also rose by 27 per cent o N12.9 billion in first quarter 2022 as against N10.1 billion in first quarter 2021.
- Non-interest income: however dropped by 19.1 per cent to N11.5 billion as against N14.2 billion in first quarter 2021.
Profit before tax also declined by 8.8 per cent to N6.4 billion in first quarter 2022 compared with N7 billion in first quarter 2021.
- Operating expenses had risen by 3.9 per cent to N18 billion from N17.3 billion. The balance sheet also weakened. Gross loans dropped to N882.9 billion from N899 billion in December 2021. Non-Performing Loan (NPL) ratio was flat at 4.3 per cent
- Customer deposits declined by 3.5 per cent at N1.31 trillion from N1.36 trillion last December; due to paying down of expensive time deposits
Chief Executive Officer, Union Bank of Nigeria (UBN) Plc, Emeka Okonkwo, said: “In 2022, we renewed our focus on turbocharging productivity and ensuring we fully leverage the strength of our digital channels, regional network and talent to maximise the bottom line.
“Our efforts are gaining momentum and notwithstanding a challenging economic climate in Q1 2022, our Net Interest Income after impairment grew by 27per cent compared to the same quarter in 2021 from N10.1 billion to N12.9 billion. Gross Earnings are also up by 18 per cent to N42.9 billion against N36.4 billion in Q1 2021. This was bolstered by improved asset yields, treasury trading income and revenues from our alternate channels. We are steadily seeing increasing customer adoption with a 36 per cent YoY increase in active users on UnionDirect, our agency banking network, and increasing transaction volumes with a 20per cent YoY growth across our digital channels.
“Interest Income grew by 41per cent from N22.2 billion to N31.4 billion as our earnings asset base expanded with a more viable loan portfolio.
“Our NPL ratio is flat at 4.3per cent (from December 2021), within the regulatory limit, while cost to income ratio dropped from 79.4per cent in December 2021 to 73.9per cent in March 2022. We will continue to drive cost optimisation to ensure consistent improvement in efficiencies.
“With a Capital Adequacy Ratio (CAR) of 15.6 per cent, our capital position remains strong.
“On the innovation side, we launched SpaceNXT – a purpose-built hub created to encourage innovation and foster collaboration within the tech ecosystem. This remains a space where Union Bank desires to maintain a leading position.
“For the rest of H1 2022, we will continue to focus on driving productivity, mining targeted opportunities across regions and optimising our digital platforms to deliver improved customer service and acquisition. ”
Speaking on the results, Chief Financial Officer Joe Mbulu said: “The bank continued to demonstrate resilience in our Q1 2022 results. Headline Gross Earnings increased by 18per cent to N42.9 billion from N36.4 billion in Q1 2021. Net interest income after impairment charges grew by 27per cent driven by 41per cent increase in Interest Income to N31.4 billion from N22.2 billion in Q1 2021. Non-Interest Income declined by 19.1per cent from ^14.2 billion to ^11.4 billion driven by higher foreign currency revaluation loss.
“Operating Expenses increased marginally by 3.9 per cent QoQ, as a result of higher regulatory, diesel, and software expenses. In Q2 2022, we will focus on optimising operating costs by intensifying measures to mitigate the impact of high inflation.
“We will also continue to drive for a more efficient balance sheet by paying down expensive deposits and pricing our risk assets better.”