Union Bank June profit lifted by new loans, fee incomes amid low provisions

Chairman Dinesh Weerakkody

Director/CEO Dilshan Rodrigo

Union Bank of Colombo PLC reported some robust financial performance for the three months ended in June 2025, on the back of higher growth in loans and rising fee incomes.

The bank reported a net interest income of Rs.1.64 billion for the April-June quarter, up 22 percent from a year ago, as interest incomes rose at a faster pace than the increase in interest expenses.

The bank, as a result, managed to defend its net interest margin at 3.40 percent by the end of June 2025 from the levels seen at the end of last year.

As the interest rates come down, the net interest margin – the difference between what the bank earns from its loans and other interest-bearing assets and what the bank pays for its deposits and other interest-bearing liabilities – tends to narrow.

The bank gave loans worth of Rs.7.42 billion in the June quarter, bringing the total for the first six months to Rs.19.03 billion, which translated into a robust 21.6 percent growth. The bank attributed this growth to strategies implemented in leasing and pawning portfolios.  

The bank closed the quarter surpassing hundred billion loans at Rs.107.29 billion.

Despite the faster growth in loans, the bank managed to contain its provisions for possible bad loans at Rs.74.54 million, slightly less than Rs.78.95 million set aside in the same period last year.

The bank’s stage three loans ratio, which is somewhat equivalent to the non-performing loan ratio fell to 10.6 percent, from 12.3 percent at the start of the year.

Meanwhile, the deposits grew by Rs.2.17 billion in the quarter, taking the six months’ growth to Rs.4.35 billion and a total deposit portfolio of Rs.108.09 billion.

The bank reported earnings of 18 cents a share or Rs.199.28 million for the quarter, compared to 2 cents a share or Rs.16.60 million in the corresponding period in 2024.

For the six months, the bank reported earnings of 23 cents a share or Rs.245.29 million, compared to 6 cents a share or Rs.66.20 million in the same period in 2024.

The fee and commission incomes too helped the bank to report higher profits as such incomes rose by as much as 49 percent to Rs.404.25 million for the quarter coming from higher loan volumes and trade-related activity.

CG Capital Partners Global Pte. Ltd, an affiliate of the renowned CG Corp Global conglomerate, holds a 70.84 percent stake in the bank through Culture Financial Holdings.