Union Bank has posted a profit of Rs 147 mn for the first quarter of 2017.The Bank showed a strong 95% growth on Results from Operating Activities, recording Rs. 147 mn in comparison to Rs. 75 mn in the previous year, reflecting the successful implementation of the Bank’s strategic initiatives.
Union Bank Director and Chief Executive Officer Indrajit Wickramasinghe said the 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”.
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. 166 mn 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.91 mn 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. 167 mn. 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. 95 mn.
Total Assets of the Bank grew to Rs. 101Bn, a 8% growth YTD.
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