Ceylon FT: Union Bank of Colombo PLC (UBC) profits fell 79.56% from a year ago to Rs 99.06 million in 2013 as the bank continues to invest in infrastructure and focus on servicing small and medium enterprises (SMEs) with foreign investments sought to boost its corporate portfolio.
Interest income grew 21% to Rs 4.4 billion and interest expenses grew 39.97% to Rs 3.12 billion leading to an 8.8% dip in net interest income to Rs 1.28 billion. Credit loss expenses grew 306.5% to Rs 292.4 million.
“Our focus on SMEs will continue because we strongly believe that growth does lie in this segment of business and this focus is a national responsibility to us as it is one that gives us the opportunity to partner the state in developing a crucial conduit in its development agenda. However, we are a small bank and it is vital that we identify our customer base in line with our capabilities,” UBC Chairman Alexis Lovell told shareholders in the bank’s 2013 annual report.
“We have continued to grow our SME and Retail customer base, which now accounts....for 60% of the business, thereby aligning with the Bank’s vision of being a bank of choice for SMEs. We are working on an astute mix to infuse the right balance.
“We realise the inherent challenges in the corporate customer base which accounts for 40% of the business currently, primarily because being a small bank, our cost of borrowing is high and as would be prudent, the corporate sector pursues better rates from us. Introducing massive capital infusion would be the solution in managing this challenge,
which leads us to the options of either obtaining this capital from our existing shareholders or introducing a global brand as an investor. Given our strategic plans, it is rational for UBC to pursue the option of a global investor, to invest in a progressive bank like ours. With this capital infusion, cost of borrowing will naturally reduce and we can be a firm contender in gaining the best corporates into our customer base,” Lovell said.
The bank’s deposit base increased 22.5% to Rs 28.3 billion as falling gold prices and sluggish credit demand dampened the bank’s performance.
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Interest income grew 21% to Rs 4.4 billion and interest expenses grew 39.97% to Rs 3.12 billion leading to an 8.8% dip in net interest income to Rs 1.28 billion. Credit loss expenses grew 306.5% to Rs 292.4 million.
“Our focus on SMEs will continue because we strongly believe that growth does lie in this segment of business and this focus is a national responsibility to us as it is one that gives us the opportunity to partner the state in developing a crucial conduit in its development agenda. However, we are a small bank and it is vital that we identify our customer base in line with our capabilities,” UBC Chairman Alexis Lovell told shareholders in the bank’s 2013 annual report.
“We have continued to grow our SME and Retail customer base, which now accounts....for 60% of the business, thereby aligning with the Bank’s vision of being a bank of choice for SMEs. We are working on an astute mix to infuse the right balance.
“We realise the inherent challenges in the corporate customer base which accounts for 40% of the business currently, primarily because being a small bank, our cost of borrowing is high and as would be prudent, the corporate sector pursues better rates from us. Introducing massive capital infusion would be the solution in managing this challenge,
which leads us to the options of either obtaining this capital from our existing shareholders or introducing a global brand as an investor. Given our strategic plans, it is rational for UBC to pursue the option of a global investor, to invest in a progressive bank like ours. With this capital infusion, cost of borrowing will naturally reduce and we can be a firm contender in gaining the best corporates into our customer base,” Lovell said.
The bank’s deposit base increased 22.5% to Rs 28.3 billion as falling gold prices and sluggish credit demand dampened the bank’s performance.
www.ceylontoday.lk
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