Union Bank recorded an improved core banking performance despite the challenges of a tough operating environment and posted an overall income of Rs. 3, 148 million for the quarter, which is a 10% increase over the comparative period. Net interest income (NII) increased by 11% owing to improved yields from the re-pricing of the asset portfolio and prudent management of interest expenses which lead to an increase in the net interest margin (NIM) by 33 basis points (bps). Fee and commission income increased by 17% as a result of the higher contribution from credit and debit cards, and the increased activity from the trade business. Other operating income decreased by 4% due to the lack of liquidity and volatility in the government securities market.
The operating expenses of the bank increased to Rs. 983 million, an increase of 8% over the corresponding period, mainly impacted by the depreciation of the rupee and increase in other expenses.
Considering the stresses stemming from the macro-economic environment, the bank conservatively provided for impairments, including management overlays. The impairment charge for the period was Rs. 288 million, an increase of 47% compared to the corresponding period of Q1 2021.
Consequently, the bank’s profit before tax (PBT), including its equity, accounted for a share of subsidiaries for the period under review remained flat at Rs. 316 million compared to last year due to the deteriorated operating environment and increase in value-added tax (VAT) on financial services from 15% to 18% in 2022. In comparison to Q1 2021, the bank’s profit after tax (PAT) was adversely impacted as the corresponding year’s charge was after the one-off reversal of the overprovision made in the previous year.
Total assets of the bank increased by 10% to Rs. 129,878 million by 31 March 2022. Loans and advances grew by 11% to Rs. 75,479 million, whilst customer deposits increased by 9% to Rs. 91,226 million due to the heightened focus on current and savings account (CASA) balances across all segments. The CASA ratio remained at a healthy 30.4% as of 31 March 2022. The bank’s stage three loan ratio was controlled at 4.8% aided by strong recovery capabilities and customised repayment plans
The bank continued to maintain a healthy capital adequacy position, well above the regulatory requirements and the bank’s total capital ratio was 14.45% as of 31 March 2022.
The Union Bank Group, consisting of UB Finance Company Ltd., and National Asset Management Ltd., recorded a PBT of Rs. 398 million for the period, a decrease of 5% compared to the corresponding period. The total assets of the group was Rs. 136,132 million, an increase of 10% with the bank’s share amounting to over 95%.