Union Bank has posted a N79.8 billion profit before tax for the half year period of 2024, a 20 per cent increase over N66.5 billion which it recorded in the comparable period of 2023.
The bank in its June 30 half year report had also seen a 58 per cent improvement in gross earnings. Union Bank had recorded a gross earnings of N333 billion compared with N210.5 billion recorded during the corresponding period of 2023.
Commenting on the results, Managing Director and Chief Executive of the bank, Yetunde Oni, said: "I am pleased that Union Bank of Nigeria has delivered a progressive financial performance in the first half of the year, with a significant boost in Net Interest Income, Net Operating Income, and Net Trading Income.
"At the beginning of the year, our top priority was to keep the momentum going with a strong focus on stability following the intervention of the Central Bank of Nigeria. We also continued with the planned strategic priorities, which are centred around scaling our digital play, driving hypergrowth in target sectors, optimising our wholesale bank structure, aggressively ensuring recoveries of past-due obligations, and orchestrating a robust ecosystem play through existing and new partnerships.
"So far, we are seeing the direct impact of our strategy on our financial performance. We achieved a substantial increase in Gross Earnings by 58 per cent to N333 billion compared to N210.5 billion in H1 2023. Net Operating Income after Impairments increased by 32 per cent to N143.6 billion from N108.5 billion in H1 2023, attributed to enhanced interest income, fees, commissions, and margin expansion. Similarly, we achieved Profit Before Tax (PBT) of N79.8 billion, representing 20 per cent growth compared to N66.5 billion in H1 2023.
"These achievements reflect the remarkable resilience and dedication of our staff, who have been instrumental in navigating the challenges of a demanding operating environment. Despite the pressures of inflation, exchange rate volatility, and increased operational costs, our team has remained steadfast and committed to delivering excellence. I extend my sincere appreciation to all our employees for their hard work and unwavering dedication, which have been critical to our success in the first half of 2024.
She furthered that "in line with the realities of our environment, the bank has initiated the process of recapitalisation. The Banking Sector Recapitalisation Program, introduced by the Central Bank of Nigeria (CBN), mandates banks to increase their minimum paid-in common equity capital to a specified amount by April 2026, per their licence category and authorisation. This strategic initiative is not only aimed at aligning our capital adequacy with regulatory standards but also at surpassing them, thereby fortifying our financial stability and positioning us to capitalise on emerging market opportunities.
"As we move forward, our focus remains on building a controlled, compliant, and profitable organisation. We are committed to maintaining strong governance frameworks, ensuring regulatory compliance, and driving sustainable profitability. These pillars will not only fortify our financial stability but also position us to capitalise on emerging opportunities in the market. I am confident that with our continued focus on these priorities, we will sustain our positive momentum and deliver long-term value to our stakeholders."
Speaking on the H1 2024 numbers, acting chief financial officer Oluwagbenga Adeoye said:
"Our H1 2024 financial performance is a testament to the Bank's resilience because it came on the backdrop of a slow start, occasioned by the high inflationary environment, exchange rate volatility, increased power costs and other factors.
"Nevertheless, we were not entirely insulated from these shocks as Non-Interest Income reduced marginally in H1 2024 by three per cent to N108.3 billion from N112.1 billion in H1 2023 due to foreign exchange revaluation loss. Operating Expenses increased by 52 per cent to N63.8bn against N42bn in H1 2023, majorly due to the high inflationary environment, increased power cost and increased non-discretionary regulatory cost. Notwithstanding, our Cost to Income Ratio remains below 50% at 44% compared to 39% recorded in H1 2023 on the back of implementing planned cost-efficiency initiatives.
"The Bank continued to grow its loan book cautiously, with gross loans increasing by 24 per cent to N1.93 trillion compared to N1.55 trillion in December 2023, customer deposits grew marginally by one percent to N2.36 trillion from N2.34 trillion in December 2023, reflecting the impact of socio-economic pressures on our operating environment.
"In the second half of the year, we will focus on improving efficiency and driving our non-interest income. We are confident that we will finish the year strong and sustain the returns on equity and returns on assets, which stood at 40.6 per cent and 3.68 per cent, respectively."
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Further analysis of the Bank's performance during the reviewed period showed that its net operating income after impairments rose to N143.6 billion from N108.5 billion in 2023, representing a growth of 32 per cent, non-interest income reduced marginally by three percent to N108.3 billion from N112.1 billion during the corresponding period of 2023 due to foreign exchange revaluation loss.
Operating expenses moved up remarkably by 52 per cent to N63.8 billion from N42 billion in the corresponding period of 2023, resulting from the inflationary environment,increase in power costs and increase in non-discretionary regulatory costs.
In the same vein, gross loans increased by 24 per cent to N1.93 trillion from N1.55 trillion in December 2023 while customer deposits went up marginally by one percent to N2.36 trillion from N2.34 trillion in December 2023, reflecting the impact of the challenges posed by the socio-economic environment on its operations.
