Union Bank posts steadfast 9-month performance

Union Bank was able to continue a steadfast performance in the 9 months ended 30 September 2023, recording a notable improvement in the core banking performance with an overall income of Rs.17, 314 million, a 36 percent increase over the comparative period.

Net interest income (NII) was a key driver for the increase in the bank’s revenue, which increased by 19 percent to Rs. 4,822 million as a result of improved yields from the loan portfolio and treasury assets. 
The bank does not hold any International Sovereign Bonds (ISBs), and the Sri Lanka Development Bonds (SLDB’s) portfolio was exchanged for LKR denominated Treasury Bonds as part of the DDO.

The net interest margin (NIM) increased by 72bps due to the timely repricing of the asset book along with prudent management of interest expenses. 
Net fee and commission income increased by 9 percent aided by credit cards, remittances, and increased activity from the trade business. The bank’s Total Operating Income before impairments was Rs.6,185 million., an increase of 11 percent. The bank’s impairment charge for the period was Rs.1, 200 million.

Despite the prudent cost management initiatives, the bank’s total operating expenses increased by 22 percent to Rs.3, 838 million  mainly due to, significant increases in the utility tariffs, salaries and exchange impacted general expenses.
Consequently, the bank’s profit before tax (PBT) including its equity accounted share of subsidiaries as of  30 September 2023, increased by 81 percent to Rs.717 million and the bank’s profit after tax (PAT) also increased by 65 percent to Rs.375 million.

Taxes and levies during the 9 months increased significantly due to the Social Security Contribution Levy ( SSCL) and the increase in the Corporate tax rate. 
The total assets of the bank stood at Rs.130,319 million as of 30 September 2023. The bank maintained a strong liquidity position during the period under review and the liquid asset ratio stood at 39.16 percent whilst, the liquidity coverage ratio was 878 percent, above the regulatory requirements.

The bank’s loans and advances were Rs.63, 204 million, whilst customer deposits were Rs.85, 798 million. The CASA ratio was recorded at 24.33 percent as of 30 September 2023, aided by macro-economic drivers backed by strong sourcing initiatives across all business segments. The bank’s stage 3 loan ratio improved to 10.52 percent. 
The bank continued to maintain a healthy capital adequacy position, well above the regulatory requirements and the bank’s total capital ratio was 18.54% as of 30 September 2023. 

The Union Bank Group, consisting of UB Finance Company Ltd., and National Asset Management Ltd., recorded an improved overall performance with a 57 percent increase in PBT amounting to Rs.825 million and an increase in PAT by 52 percent amounting to Rs.459 million for the period up to 30 September 2023. The total assets of the group was Rs.138, 519 million with the bank’s share amounting to over 94 percent.

On 24 October 2023, the Board of Directors of Union Bank received formal notification that the transaction between TPG and CG Capital Partners Global Pte Ltd had been completed and through its ownership in Culture Financial Holdings, CG Capital Partners is now the major shareholder of Union Bank.  The new partnership with CG Group reaffirms the bank’s financial stability and provides a platform for enhanced growth and expansion.