Union Bank reports steady growth with favourable 1Q results
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Bank CEO Indrajit Wickramasinghe
Union Bank ended the first three months of 2021 with a strong performance, reflecting a steady growth momentum and fuelling favourable expectations.
Union Bank’s overall revenue for the quarter was Rs.1,521 million and despite the tough operating environment the overall revenue grew by 1 per cent over the comparative quarter, it said in a media release
The bank’s Net Interest Income (NII) was Rs. 985 million, down marginally by 4 per cent over the comparative period ended 31st March 2020, due to the lower AWPLR that prevailed during the review period in comparison to the previous year.
“Interest rate rebates and rate caps imposed on certain products under Central Bank (CB) directives along with concessionary lending programmes which continued in support of COVID-19 affected customers further contributed to this decline. While the credit demand had not picked up at the expected pace despite conducive market interest rates and concessions granted to customers, an uptick in economic activity contributed to the overall credit growth. Effective portfolio management strategies contributed towards managing the NII amidst these challenges,” it said.
Profitability was strengthened by improved net fee and commission income and other operating income.
In line with prevalent macro-economic stresses and the additional lockdowns the bank conservatively provided impairment charges and accordingly, the impairment charges for the quarter increased by 111 per cent YoY to Rs. 196 million.
Results from operating activities for the quarter was Rs.418 million, an increase of 3 per cent YoY.
Post tax profit including its ownership share of subsidiaries for the quarter was Rs. 282 million, a 57 per cent increase YoY. This represents the positive impact from the bank and the negative impact that came through the deferred tax asset recorded in UB Finance Co. Limited’s books as a result of the change in corporate tax rate.
The group comprising the bank and its two subsidiaries, National Asset Management Ltd and UB Finance Company Ltd, reported a Profit after Tax of Rs. 301 million for the period, an increase of 54 per cent YoY.