• Last Update 2021-09-27 14:53:00

Union Bank concludes 1H21 with a steady performance

Business

 

Union Bank was resilient despite economic setbacks resulting from the pandemic in 2020 and re-aligned its strategy for recovery and growth, reporting a strong performance during the first quarter of 2021 with favourable returns and increased revenue, the bank said on Friday.

 

“However, challenges continued with a third wave hitting in April 2021 adding further limitations to the business growth momentum.  Despite these setbacks the bank continued to maintain consistent performance even during the second quarter and concluded the first half of the year 2021 with a strong core banking performance,” it said in a statement.

 

Although the banking sector activities were under pressure in the second quarter amidst travel restrictions etc that delimited operations, the focused efforts of Union Bank’s operations contributed to this performance in the second quarter.

Revenues were impacted by the low AWPLR that prevailed along with the new credit relief schemes introduced by the Central Bank of Sri Lanka (CBSL) for customers affected by the third wave of the pandemic.

 

The statement said the bank’s Net Interest Income (NII) during the first half of 2021 was Rs. 2,103 million and reported a growth of 4% YoY. The Net Interest Margin improved to 3.44% during the period ended 30th June 2021, compared to 3.23% in the comparative period.

 

Total other income of the bank declined during the 1st half by 18% YoY to Rs. 527 million mainly due to total capital gains including investments in unit income declining by 43% to Rs. 310 million. However, exchange gains increased by 117% YoY, largely driven by the exchange rate deflation by 8% and the rate fluctuations during the said period.

 

“Despite external challenges, the Operating Income of the bank for the period ended 30th June 2021 was Rs.  3,036 million, a growth of 3% over the comparable period last year. Due to continued focus and efforts on prudent cost management across the bank, the Operating Expenses reduced by 6% YoY to Rs. 1,809 million. Pre-impairment profits of the Bank for 1H2021 were Rs.1,227 million and reflected a 18% growth YoY,” it said.

 

Profit after Tax of the bank for the period under review grew by 44% to Rs. 455 million highlighting its steady progress during the first half of 2021.  

The gross NPL ratio of the Bank reduced to 5.83% by end of the reporting period compared to 6.05% as of December 2020.

Commenting on the 1st half performance of the bank, Director/Chief Executive Officer Indrajit Wickramasinghe said, “The bank’s growth momentum in the second quarter of 2021 was impacted by the sudden outbreak of the third wave and its resultant impacts on the operating environment.  With the development of the third wave, our key priority had to be adjusted once more towards extending the Central Bank recommended credit relief to impacted customers in a bid to support them to cope with the continued financial pressures. During this challenging period while managing its bottom line, the bank remained mindful in maintaining its healthy liquidity position, strong capital adequacy and ensuring the safety of customers and staff as a part of its sustainable business strategy. In the remainder of the year, while providing the much-needed financial impetus to our customers across Retail, Corporate and SME segments we will continue the focussed growth initiatives to drive performance while taking all due precautions to maintain optimum safety levels for our staff and customers.”

 

 

Bank Chairman Atul Malik

 

Bank CEO Indrajit Wickramasinghe

 

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