Union Bank’s 1Q reflects strong credit growth and brand investment

Union Bank said its 1Q reflects strong credit growth and brand investment.

It said the bank remains steadfast in its pursuit of growth and innovation across all sectors of operation. 

As of 31 March 2024, the bank’s Total Assets amounted to Rs. 128,534 million. Notably, loans and advances exhibited a positive trajectory, experiencing a 7% increase to reach Rs. 66,742 million, indicative of an improved economic environment. Customer deposits demonstrated robust growth, rising by 4% to Rs. 91,489 million, reflecting favourable market sentiment and customer confidence.

In a statement Union Bank said it encountered mixed challenges in its financial performance during the first quarter of 2024. Total operating income experienced a reduction of 9% to Rs. 1,869 million, compared to the corresponding period of 2023, primarily attributed to decreased spreads in the treasury and loan portfolios. 

Additionally, adverse impacts from LKR appreciation led to a decline in exchange related income by Rs. 82 million. Impairments was Rs. 295.3 million, reflecting a reduction due to improved collections. Operating expenses were effectively managed at Rs. 1,294 million, representing only a 7% increase. Consequently, the bank’s results from operating activities was Rs. 280 million, the bank’s Profit Before Tax, including the equity accounted share of subsidiaries, amounted to Rs. 135 million, and the Profit After Tax was Rs. 48.6 million for the quarter.

CASA ratio was 23.3%. Stage 3 loans ratio was at 11.35% with a significant amount being collatarised. Total Capital Ratio was 16.85% as of 31 March 2024, well above the regulatory requirements. Union Bank Group consisting of National Asset Management Ltd. and UB Finance Company Ltd., reported a PBT of Rs. 152 million and a PAT of Rs. 48.98 million with the bank share being 95%. 

Throughout the first quarter of 2024, Union Bank said it diligently pursued new avenues for growth and innovation, reinforcing strategic objectives and transformation evidenced by significant measures and milestones including a fresh outlook for the Union Bank brand with a new logo, symbolising customer-centricity, service excellence, and digital transformation. This was cascaded bank-wide and supported by a cohesive communication campaign across media and digital platforms and an engaging customer event for the unveiling of the new logo. 

The bank also announced the launch of the Union Bank School of Social Entrepreneurship (UBSSE) which represents the bank’s commitment to society through knowledge, education, skills development, guidance, and social wellbeing. 

Corporate and SME Banking demonstrated a steadfast commitment to fostering new customer relationships, driving business expansion, and fortifying market presence. The Treasury prudently managed the reinvestment risks associated with the further reduction of interest rates whilst maximising gains from the Government Securities Portfolio and managing the impact of the appreciation of the Rupee through hedging strategies. Retail Banking focused on expanding the loan portfolio, driving growth in Current Account Savings Account (CASA), and enhancing fee income through strategic initiatives, including leveraging alternate channels such as Bancassurance. 

Driving digital Innovation, the bank inaugurated the first digital zone at the head office, offering round-the-clock smart banking services, underscoring dedication to harnessing technology for comprehensive banking solutions.