Union Bank reports 6% increase in pre-tax profit to N15.7bn

Union Bank of Nigeria Plc has announced its audited financial statements for the year ended December 31, 2016 with profit before tax gaining six per cent to N15.7billion from N14.9billion in 2015.
Gross earnings rose by eight per cent to N126.6billion from N117.2billon in 2015.
Interest income increased by eight per cent to N98 billion as against N90.9billion in 2015, driven by loan book growth and improved Bank asset yields.
Interest expense: down by six per cent to N33billion from N35.2billion in 2015: improved customer funding base; less reliance on expensive interbank funding, leading to drop in core cost of funds to 5.23per cent in 2016 from 6.64 per cent in 2015.
The financial institution reported a 0.24 per cent increase in Non-Performing Loan (NPL) to 6.91 per cent from 6.67 per cent in 2015, above Central Bank of Nigeria (CBN) five per cent thresholds.
Following approvals from its shareholders, Union Bank will launch a rights issue in the second quarter of 2017 to raise up to N50 billion in Tier 1 capital as it looks to accelerate business growth and position as a leading commercial bank in Nigeria.
The additional funding will also allow Union Bank to maintain compliance with regulatory capital requirements.
Union Bank also marks its centenary anniversary in 2017. The Bank will celebrate the 100- year milestone under three broad themes – Celebrate, Impact and Lead.
According to Chief Executive Officer, Emeka Emuwa, “Our 100th anniversary presents a unique opportunity for Union Bank to frame its own story, highlighting our many successes over the last century and presenting our simpler, smarter vision of banking and corporate citizenship to a new generation of customers.”
Speaking on the Group’s results for the year, 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%, 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 15per cent, compared to 2015, and a 73per cent 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.
Commenting further on the 2016 financials, Chief Financial Officer, Oyinkan Adewale, said, “On the back of strong customer deposits, the Bank reduced average interbank local currency borrowing by 75per cent, leading to 141basis points reduction in primary cost of funds and 17per cent increase in net interest income.
“The Group continued to drive cost optimisation, with cost-income-ratio declining to 66.2per cent from 70.7per cent 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