Thursday, 14 November 2013 00:00
-
- {{hitsCtrl.values.hits}}
As challenges in the industry continue in the third quarter of 2013 Union Bank reported a Rs. 226.8 million post tax profit for the nine month period, a decrease of Rs. 39.2 million, a 15% drop compared to the corresponding period in 2012.
The decline in profit after tax is demonstrated mainly by the increase in impairments by Rs. 136 million during the period. Year-to-date impairment provision made against pawning was Rs. 52.2 million. However, total operating income before impairments showed an increase of Rs. 140 million in comparison to the previous period.
Net Interest Income for the bank increased to Rs. 341 million during the quarter recording a 9% growth. Net Interest Margin also improved in comparison to the first two quarters of 2013 caused by a reduction in the cost of deposits due to the reduction in interest rates.
Net fee and Commission Income of the bank for nine months also showed a positive variance with a 21% increase over the comparable period and Interest income recorded an increase to Rs. 921 million at the end of the period. Total Operating Income for the nine month period also grew by 11% during the quarter versus last year.
Year to date expenses increased by Rs. 122 million which is a 15% growth compared to previous comparable period. This increase is primarily due to 32% increase in the branch network and 31% increase in number of employees compared to the comparative period in 2012. The branch network at the end of the quarter was 45.
Positive progress
Net Interest Income of the group recorded a 28% growth due to the positive progress of the bank’s subsidiary UB Finance. This also had a favourable impact on the Total Operating Income.
Total assets of the bank increased by 14% to Rs. 35.1 billion in comparison to December 2012 and the Union Bank Group also reported a 15% increase to Rs. 36.5 billion for the same period. Total equity of the bank was Rs. 5,569.7 million and net assets per share as at the reporting date is Rs. 15.95.
Gross NPLs increased to 6.94% from 5.43% in December 2012. Despite the challenging environment and lower credit growth, the loan book of the bank grew by 15% to Rs. 23.1 billion. Total deposits too increased by 18% to Rs. 27 billion.
UBC continues to deliver on its premise to the development of Small and Medium Enterprises. During the year the bank embarked on a rapid network expansion opening in excess of 11 new branches to date and its branch network is expected to exceed 50 branches by year end providing a significant upward momentum to its future growth.
The bank is currently successfully implementing a Core Banking System which will be completed by 2014. This will bring about significant cost efficiencies through process improvements and facilitate additional functionality enabling better product and service delivery to customers. Additionally, a sophisticated and robust risk management system was also acquired to enable more responsiveness to customers.
The bank has also made significant investments in brand building initiatives.
