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Union Bank of Nigeria (UBN) Plc, one of the nation’s oldest and reliable deposit money banks, announced its audited financial statements for the year ended 2017, as many of its financial ratios showed significant progress was made in the year that just ended. Gross earnings for the year rose by 26.42 percent from N129.61 billion in 2016 to N163.84 billion in 2017. Interest income was up by 24.90 percent as UBN earned N124.55 billion in 2017 compared with N99.72 billion in 2016.
Net interest income and operating income were up by 2.51 percent and 4.30 percent, indicating that UBN realised N66.67 billion and N80.36 billion as net interest and operating incomes in 2017 in contrast to N65.04 billion and N77.05 billion in 2016 respectively.
The increase in the above ratios has been attributed to oversubscription of rights issue, launch of bespoke products and appetite for UBN services demonstrated through upsurge in new-to-bank customers.
“Following an oversubscribed rights issue that raised approximately N50 billion at the end of 2017, Union Bank now has a strengthened capital base to support business growth and maintain regulatory capital requirement”, UBN stated in a note to the Exchange.
However, a spike in interest expenses to the tune of 66.89 percent saw this indicator rise to N66.67 billion last year compared with N34.68 billion in the previous year. Total expenses rose by 5.05 percent to N65.13 billion in 2017 up from N62 billion in 2016.
Consequently, the profit before tax (PBT), profit after tax(PAT) and total income for the year recorded a marginal decline of 1.39 percent, 5.09 percent and 3.02 percent respectively. PBT in FY 2017 stood at N15.52 billion as against N15.74 billion in 2016; PAT was N14.61 billion in 2017 as against N15.39 billion in the previous year. Total income for the year was N24.6 billion in contrast to N25.4 billion in 2016.
“Strengthening our capital base through the Rights Issue was key for the Bank in 2017. Notwithstanding the challenges a tightened economy presented, the rights issue was 20% oversubscribed. This overwhelming success is credited to strong shareholder and investor confidence in Union Bank’s immediate and longer-term plans. With sufficient capital buffers, we are now in pole position to execute our growth agenda from 2018 onwards.
“Operationally, we continued to focus on growing our retail customer base and optimising customer experience with simpler, smarter banking solutions. We launched an upgraded suite of digital channels including UnionMobile, UnionOnline and our unique USSD banking code *826#, driving an increase in active subscribers above 100% on the mobile app and online banking platforms. Union Bank’s alternative banking platform remains the fastest growing in the industry”, Emeka Emuwa, GMD said in a note to the Exchange.
The bank’s loans and advances as well as deposits grew by 1.95 percent and 21.86 percent respectively. Loans and advances rose to N517.1 billion in 2017 up from N507.2 billion in 2016. As a sign of renewed confidence in UBN, deposits from customers were up to N802.4 billion last year from N658.4 billion in previous period.
Meanwhile the analysis of the distribution of UBN loans and advances by industry reveals its risks appetite last year. Sectors such as agric, oil and gas, consumer credit, transportation, communications and education got lesser loans in 2017 compared with the 2016 levels. In 2017, a total of N19.44 billion loans and advances were given by Union Bank to players in nation’s agric sector, representing a decline of 38.7 percent when compared with 2016 level. Oil and gas sector got N209.82 billion in 2017 and that was lower than N235.97 billion players in this sector got in 2016 by 11.08 percent.
Consumer credit loans fell by 25.15 percent to N17.97 billion in 2017 from N24.01 billion in 2016. Transportation loans fell by 37.68 percent to N1.9 billion as against N3.05 billion in 2016. Communications loans fell by 10.4 percent to N17.08 billion from N19.05 billion in 2016 while the players in the education sub sector received N5.76 billion as loans and advances last year in contrast to N7.66 billion in 2016.
On the contrary, loans to real estate and construction rose by 16.8 percent from N55.1 billion in 2016 to N64.4 billion last year. Power sector players got N50.18 billion last year, representing 37.94 percent increase over N36.38 billion obtained in 2016. Other loans rose by 60.52 percent from N7.21 billion in 2016 to N11.56 billion last year.
In addition, both the shareholders’ funds and total assets rose by 27 percent and 16 percent respectively.
“As a result of our successful rights issue, which was oversubscribed, we ended the year with CAR at 17.8% – well above regulatory requirements. Our coverage ratio was adequate at 103%, while our debt recovery efforts yielded good results with an increase of over 350% to ₦6 billion in the year.
“We continue to tighten our credit risk management and loan monitoring processes while pursuing an aggressive strategy to continue to grow our low-cost deposit base. We closed the year with the Regulatory Risk Reserve at N71 billion, which exceeds the expected impact of International Financial Reporting Standards (IFRS) 9 adoption in 2018”, Oyinkan Adewale, UBN’s CFO said in a statement to the Exchange.
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