Union Bank sees 42% growth in 1H pre-tax profit
View(s):Union Bank has recorded a pre-tax profit (and before VAT) of Rs.558 million in January-June this year, up by 42 per cent from the same period last year, the bank said on Wednesday. Post-tax profit was Rs. 253 million, up by 22 per cent YoY. The profit was adversely impacted due to the changes in the tax regulations subsequent to the New Inland Revenue Act enforcement. Effective tax rate for the quarter increased significantly in comparison to the first quarter. This is mainly due to the withdrawal of tax exemptions on profits made out of SLDB and Corporate Debt Instruments invested prior to the tax changes and withdrawal in the national tax credits.
Continuous growth in core banking operations contributed to the healthy performance during the period under review. Focused revenue management using portfolio realignment within and across the business units resulted in a 14 per cent YoY growth in Net Interest Income (NII) which recorded Rs.1,785 million during the period ended 30th June.
“Both Net Interest Margins (NIM) and spreads depicted an improvement during the reporting period in comparison to FY 2017. This was despite the withdrawal of the notional tax credit which bears a direct impact on the interest income earned on the Government securities portfolio carried prior to the change in the tax regulations,” the bank’s media release added.
The fee and commission income of the bank continued to improve through the key enablers articulated in the business strategy.
Fee and commission income grew by 21 per cent YoY to Rs.447 million during the period under review. Growth was mainly attributable to processing fees on an expanding loan book, commission on guarantees and CASA related fees.
Pre-impairment profits of the bank was Rs.677 million which was a 37 per cent increase YoY. Despite the challenging macro environment, the group consisting of the bank and its two subsidiaries, UB Finance Company Ltd and National Asset Management Ltd reported a profit-before-all taxes of Rs.670 million for the period which was a growth of 35 per cent YoY.