Union Bank concluded a strong first half, recording significant growth in core banking revenue with resultant profits before all taxes of Rs. 849 million, amid challenging market conditions that tested the resilience of businesses across all sectors.
The second quarter of 2019 carried unforeseen challenges for the banking sector, which was under demanding economic conditions caused by the unfortunate events that unfolded in April 2019. Despite a very challenging macro environment, Union Bank reported healthy core banking growth with Net Interest Income (NII) significantly increasing by 19% YoY, to report Rs.2,131 million. Net Interest Margin of the Bank improved to 3.4% from 3.1% in the comparative quarter.
Income from capital gains for the period was Rs. 253 million which was a noteworthy increase YoY. Income from investments in units for the period was Rs.123 million and was a reduction of 20% YoY. This is due to the decrease in investments in unit trusts during the period.
The decline in other operating income was mainly due to the reduction in foreign exchange business income which was approximately 50% of the income reported during the corresponding period last year.
This was mainly due to a significant reduction in trade business stemming from the macro economic challenges of the quarter. During the quarter under review, the Total Operating Income of the Bank rose to Rs. 2,899 million, and represented a growth of 13% YoY.
Commenting on the first half performance of the Bank in the year 2019, Director/CEO of Union Bank Indrajit Wickramasinghe said, “We have had a very positive 2019 so far, despite the many challenges of the macro environment. The results are significantly impressive and indicate our resilience and further endorses the business strategy. We will continue to grow at this pace and look forward to an even better core banking the performance in the latter part of 2019, in tandem with the recovery of the economic landscape.”
Profit after tax (PAT) for the period was Rs.297 million and was an 18% increase YoY. PAT of the Bank was significantly affected by the increase in tax rates. Effective tax rate (all taxes) for the period increased to 70% in comparison to 59% in the comparative period.
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