Union Bank maintains steady growth despite challenges in FY21

Union Bank’s profit after tax in 2021 was Rs.765 million, a 32.7 per cent growth YoY. The reduction in the corporate income tax rate by 4 per cent lead to a positive impact on the income tax charge for the year. The share of profit of equity accounted investees was Rs.66 million. This contribution was derived mainly through the bank’s subsidiary, UB Finance Ltd, the bank said in a media release.

It said Union Bank maintained a steady growth momentum reflecting the determined pursuit of its business strategy, primarily driven by the bank’s core banking performance in the first six months of 2021. Whilst cautiously managing the risks within its business operations, the bank continued its support to impacted customers with the extension of debt moratoria in line with the relief measures mandated by the Central Bank. The bank also maintained a strong liquidity and capital position throughout the year, and the latest Fitch review in September 2021 reaffirmed Union Bank’s rating at BBB(-) with a stable outlook; driven by several key factors including high liquidity, significantly higher capitalisation and potential for growth under improved operating conditions.

The Net Interest Income (NII) of the bank increased by Rs. 387 million to Rs. 4,257 million in 2021, reflecting a YoY growth of 10 per cent. The interest income of the bank was impacted by lower AWPLR that prevailed during the year and the extension of Central Bank’s new credit relief schemes for impacted borrowers. However, NII benefited from the reduction in liability interest expense at a faster pace of 33.1 per cent over the corresponding year.

The bank’s loans and advances stood at Rs. 67,835 million by year-end, marginally higher than in the corresponding year. The portfolio growth was primarily driven by Corporate, SME and Credit Cards while focused efforts for prudent credit growth and portfolio consolidation were continued throughout the year across Retail, SME and Corporate Banking segments of the bank.

The deposit base stood at Rs. 83,416 million at year-end.

The group consisting of the bank and its two subsidiaries, UB Finance Company Limited and National Asset Management Limited reported a profit after tax of Rs. 850 million, 37 per cent growth over the corresponding year.

Commenting on the bank’s financial performance of the year, Director/Chief Executive Officer Indrajit Wickramasinghe said “When operating amidst a turbulent macro-economy, the bank prioritised its focus on undisrupted service delivery and prudent business growth. Aided by a robust Business Continuity Plan and sound risk management strategies, the bank remained committed to the pursuit of supporting its customers, staff and other stakeholders throughout the evolving phases of the pandemic in 2021. Due to agile strategic maneuvering, Union Bank withstood a challenging year with sound liquidity, strong capitalization and a healthy performance. The year 2022 rings in more optimism and hope as the world is emerging from the worst of the COVID-19 pandemic, prompted by the successful vaccination drive. The bank is well poised to capitalise on the emerging opportunities within the market, and the year 2022 will be a continuation of the strategic pursuit for creating and protecting value for our stakeholders while ensuring the safety and well-being of our customers and staff members.”