Union Bank posts resilient core-banking performance in 1H2022 amidst challenges


Union Bank recorded an improved core banking performance despite the challenges of a tough operating environment and posted an overall income of LKR 7,426 M for the first half, an increase of 31% over the comparative period.

Net Interest Income (NII) increased by 19 % as a result of improved yields from the re-pricing of the asset portfolio and prudent management of interest expenses which lead to an increase in the Net Interest Margin (NIM) by 57 bps.

   Net Fee and Commission Income increased by 24% aided by domestic and international fund transfers, ATM transactions, credit and debit cards, remittances, and the increased activity from the trade business. Other Operating Income also increased by 141 % aided by foreign exchange income and gains.

Operating income before impairments was LKR 3,575 M, an increase of 18% as at 30 June 2022. The impairment charge for the period was LKR 961 M, an increase of 120% compared to the corresponding period.

The total operating expenses of the Bank increased to LKR 2,059 M, an increase of 14 % over the corresponding period.

Consequently, the Bank’s Profit Before Tax (PBT) including its equity accounted share of subsidiaries as at 30 June 2022 was LKR 304 M and the Bank’s Profit After Tax (PAT) was LKR 152 M.

Total Assets of the Bank increased by 11% to LKR 131,744 M by 30 June 2022. Loans and Advances grew by 10% to LKR 74,796 M, whilst customer deposits increased by 16% to LKR 96,779 M due to the focus on sourcing CASA and term deposits across all segments. The CASA ratio was 27.5% as of 30 June 2022. The Bank’s stage 3 loan ratio stood at 6.89%.

The Bank continued to maintain a healthy capital adequacy position, well above the regulatory requirements and the Bank’s Total Capital Ratio was 16.34% as of 30 June 2022.

The Union Bank Group, consisting of UB Finance Company Ltd., and National Asset Management Ltd., recorded a PBT amounting to LKR 395 M for the period up to 30 June 2022. Total Assets of the Group was LKR 139,428 M an increase of 12% with the Bank’s share amounting to over 94%.

 Amidst the challenges, the Corporate Banking division prudently managed its loan portfolio whilst maintaining the credit quality and recorded a 29% growth in Loans & Advances and 39% growth in Deposits.