Union Bank’s gross income increase by 73% to Rs 18,966 Mn
Union Bank continued to be resilient throughout 2022 with gross income for the year increasing significantly by 73% to LKR 18,966 MN as a result of the Bank cautiously managing its businesses with a stringent risk and recovery framework, whilst selectively pursuing new business opportunities.
Net Interest Income (NII) increased by 36.6% to LKR 5,814 MN as a result of improved yields from the repricing of the loan portfolio and treasury assets.
Prudent management of interest expenses lead to an increase in the Net Interest Margin (NIM) by 116 bps. Net Fee and Commission Income increased by 32.8% to LKR 1,143 MN aided by increased activity from the trade business, remittances, credit, and debit cards. Other Operating Income also increased by 121% as a result of the foreign exchange income and gains.
As a result of the stresses stemming from the macroeconomic environment and further challenges to the settlement of loans due to continued pressures faced by impacted borrowers, compelled the Bank to prudently provide for increased impairments which impacted the Bank’s profitability.
The impairment charge for the year was LKR 2,556 Mn, an increase of 174% compared to the corresponding period. Despite prudent cost management initiatives, the Total Operating Expenses of the Bank increased to LKR 588 Mn, an increase of 16% over the corresponding period, impacted by the Rupee depreciation and the increase in utility tariffs.
Consequently, the results from operating activities were LKR 925 Mn and the Bank’s Profit Before all Taxes including its equity accounted share of subsidiaries for the year was LKR 788 Mn and the Bank’s Profit After Tax (PAT) was LKR 314 Mn for the year ended 31 December 2022. The Total Assets of the Bank increased by 9.4% to LKR 129,483 Mn by 31 December 2022.
With the contraction in private sector credit and lending opportunities, the Bank’s Loans and Advances at the end of the year was LKR 67,727 Mn. All business segments focused on expanding lending to existing customers and maintaining credit quality whilst pursuing selective lending opportunities Bank
The Bank maintained a robust liquidity position both in LKR and FCY throughout the year. Customer deposits remained stable and increased by 11% to LKR 92,592 Mn aided by prudent deposit mobilization amidst rate revisions. The average CASA of the Bank remained healthy with a CASA ratio of 23% as of 31 December 2022. The Bank’s stage 3 loan ratio stood at 8.19%.
The Bank continued to maintain a robust capital adequacy position, well above the regulatory requirements and the Bank’s Total Capital Ratio was 18.26% as of 31 December 2022.
The Union Bank Group, consisting of Union Bank of Colombo PLC, UB Finance Company Ltd., and National Asset Management Ltd., recorded a PBT amounting to LKR 991 Mn and a PAT of LKR 423 Mn for the year ended 31 December 2022.
The Total Assets of the Group was LKR 136,679 Mn an increase of 10% with the Bank’s share amounting to over 95% noting that the group performance is propelled by the Bank.