Union Bank 2Q in red amid higher provisions against possible bad loans and operational costs – Reuters

Union Bank of Colombo PLC posted a net loss for the quarter ended June 30, 2022 (2Q22), amid higher provisions on possible bad debts, deteriorating asset quality and an increase in operational costs, although the bank’s core banking operations saw a slight decline.
healthy growth.

The banking group, comprising UB Finance Company Ltd and National Asset Management Ltd, reported a loss per share of three cents or a net loss of 27.1 million rupees for the quarter under review, compared to a profit of 17 cents per share or Rs. 186.6 million reported for the same period of the previous year. The group’s net income was impacted by a 185% increase year-on-year (YoY) in write-downs on possible bad debts to Rs 885.9 million. For the six-month period ending June 20, 2022, the bank provided 1.2 billion rupees, up 119
% year over year.

The bank’s bad debt ratio fell to 6.89% from 4.46% six months ago.

The bank extended about Rs.7 billion in loans for the six-month period, recording a modest lending growth of 10%, while it accepted deposits worth around Rs.13 billion, recording a deposit growth of 16%. The bank said its CASA ratio was 27.5% as of June 30, 2022.

The bank’s net interest income for the quarter under review was Rs 1.64 billion, up 28% year-on-year. Net free income and commissions amounted to Rs 263.8 million, up 20% year-on-year. Meanwhile, in the quarter under review, the bank saw its operating costs increase by around 200 million rupees to 1.2 billion rupees.

For the six months ending June 20, 2022, the banking group reported net profit of Rs 209.6 million, compared to net profit of Rs 483.7 million for the corresponding period of FY21. Union Bank remains well capitalized with its capital ratios above regulatory levels while liquidity is also at
modest levels.

The bank secured a line of finance from the Asian Development Bank in the March quarter to lend them to women entrepreneurs and smallholder tea farmers.

US investment giant TPG owns 71% of Union Bank, following the acquisition of the majority stake in mid-2014.

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