This was mainly attributable to the healthy increase in Net Interest Income of 73% despite the challenging Macro-Economic environment. During the period under review, the Bank remained focused on aiding the growth of Net Interest Income through prudent management of the Net Interest Margin coupled with the Total Asset growth. Net Fee and Commission income grew to Rs. 166Mn recording a 43% increase as a result of the successful implementation of the Bank’s long-term strategic plans for fee based products.
A change in the Asset Mix of the Bank brought about a decline in the Net Trading Income as funds were shifted to Interest Earning Assets from Investments in Units. This trade-off in income is a partial contributor to the increase in Net Interest Income.
The Impairment charge for the period increased by Rs.91Mn owing to one particular asset being reported under Non- Performing Assets.
In order to support the strong growth in the Balance Sheet, operating expenses of the Bank increased to Rs. 771 Mn, reporting a 15% growth YoY, in line with the Bank strategic growth and expansion focus along with its investment in Human Capital development.
The Profit before tax grew by a robust 45% to Rs. 167Mn. An increase of 138% in tax expense was experienced as a result of shifting in the assets from investments in tax-free asset classes to higher yielding taxable interest earning asset classes, which caused an increase in the effective tax rate. Profit after tax for the period was Rs. 95Mn.
Total Assets of the Bank grew to Rs. 101Bn, a 8% growth YTD. Contributing to the same, the Loans and Receivables of the Bank grew to Rs. 61Bn, a 10% growth YTD. Customer Deposits grew by 10% to Rs. 57Bn in the quarter.
The maintenance of strong capital ratios continues to be a management priority. The Bank’s Total Capital Adequacy Ratio at March 31, 2017 was 21.49% well above regulatory requirements.
The Group comprising UBC, National Asset Management Ltd and UB Finance Company Limited, recorded a healthy increase in its Net Interest Income by 61% to Rs. 922Mn YoY. Net Fee and Commission Income grew by 94% to Rs. 204Mn YoY. Group Profit after tax for the period was Rs. 120Mn.
Operational Performance
Operational Performance
Continuing on its envisioned growth trajectory, Union Bank focused its strategic investments on expansion and enhancement of banking services in 2017.
In step with its accelerated growth plans, the Bank continued to implement its focused channel expansion strategy within the first quarter of 2017; reinforcing its presence in strategic localities while strengthening its position as a full—fledged commercial bank. Within the first quarter of 2017, Union Bank relocated two branches in Pettah and Balangoda in a bid to offer a more convenient banking experience to the clients in these regions with enhanced banking services offered at more spacious, ambient locations. Three branches in Negombo, Marawila and Batticaloa were remodeled with a new outlook and an enhanced ambience; in line with the Bank’s strategic focus to deliver a redefined banking experience to its clients.
Investing further in its reach and expansion initiatives, the Bank extended its ATM network to 121 within the period under review.
As a result of its intense efforts to expand the Retail lending portfolio, Union Bank marked a milestone achievement, with the Bank’s Personal Loans portfolio crossing the Rs.4Bn threshold as of 31st March 2017.
Continuing the Bank’s focus on building Current and Savings balances for greater profitability, Union Bank launched a special Avurudu promotion named ‘Union Bank Kalin Avurudu Ganudenu’ in the month of March. Union Bank ‘Kalin Avurudu Ganudenu’, is an early-bird offer of exciting gifts for savings in a bid to encourage customers to save more during the festive season.
Adding further value to the banking experience for Union Bank account holders, the Bank offered a range of attractive savings and discounts on the Union Bank Visa International Debit Shopping Card in time for the Avurudu season. Union Bank Debit Card offered up to 30% savings at popular shopping and retail outlets during the months of March and April 2017.
Adding further traction to its existing corporate banking relationships, Union Bank continued to extend its full-fledged cash management solution- Union Bank Biz Direct to leading corporates in the country; becoming the only local bank to be able to provide large scale cash management and payment solutions in the most cost-effective and efficient manner. The Bank hopes to further capitalise on this unique solution, in order to deliver a differentiated banking experience to its existing and potential corporate clients.
Strengthening the commitment towards its SME clientele, Union Bank hosted existing and potential SME banking clients of the Bank to an evening of networking and fellowship in the first quarter of 2017. The event held in Colombo, was well received by the Bank’s SME clientele.
Union Bank continued to invest in its employee development and commenced the year 2017 with the launch of SAP Success Factors, an employee performance management system. The state-of-the-art performance management technology is a significant investment made by the Bank in the direction of strengthening the Bank’s performance culture while encouraging staff to aspire for career progression.
In a bid to further strengthen its position as a responsible corporate citizen, within the first quarter of 2017 Union Bank revived its strategic Corporate Social Responsibility (CSR) policy with a focus on children and youth. The Bank will continue to invest in its focused CSR initiatives for the benefit of the selected segment, within the year 2017 and beyond.
The Union Bank’s brand was also recognized once again by Brand Finance Lanka as one of the top 100 National brands in the country moving up 6 positions to the 59th position and also reflecting a further improvement in its rating to A- from its previous rating of BB.
The Bank was once again the first in the industry to release its Annual Report for the year 2016. Union Bank’s Annual Report 2016 was presented in February 2017, under the theme ‘Towards a Bold Leap’ which signifies the Bank’s envisioned growth plan: to achieve a bold leap of success in the coming year.
Commenting on the Bank’s performance for the first quarter of 2017, Director/Chief Executive Officer of Union Bank, Mr. Indrajit Wickramasinghe stated, “The Bank has successfully withstood a challenging first quarter. With a strong balance sheet, core income and Profit before tax growth, Union Bank will continue to invest and build on this to deliver on its focused business strategy”.
- Union bank
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