Union Bank posts 8% increase in profit

The Union Bank of Nigeria, one of Nigeria's leading commercial lenders, recently reported an 8% increase in profit after tax for the 2016 financial year. The profit amounted to 15.4 billion Naira, while gross earnings also saw an 8% rise to 126.6 billion Naira. Oinku Adiwalei, the Chief Financial Officer of Union Bank of Nigeria, discussed the factors that drove this growth in a recent interview on CNBC Africa. Adiwalei highlighted that in 2016, the Union Bank franchise experienced significant growth. The bank witnessed a 73% increase in new customers, coupled with major enhancements in channel acceptance. Mobile banking users saw a remarkable rise of 380%, while internet banking users increased by over 50%. The bank also introduced five successful retail products and rebranded nearly half of its branches. Additionally, the deposit base expanded by 15% and the loan book by 38%. Cost income ratio was reduced from 71% to 66%, and interest expenses were lowered by 6%. Adiwalei emphasized that these collective efforts led to improved performance and sustainable numbers for the bank in 2016. The bank's strategic focus on the retail space was evident in its plans for continued growth in the current year. Adiwalei expressed the intention to lead the market with innovative, research-based product offerings tailored to specific customer segments. The bank aims to leverage technology, digitalization, and research to develop products that meet the unique needs of each segment while promoting financial inclusion. One of the key priorities for Union Bank in 2017 is the launch of a 50 billion Naira rights issue to support its growth initiatives. The funds raised from the offer will be utilized for working capital, selective lending to growing sectors of the economy, trade opportunities, technology investments, and market share expansion. Adiwalei highlighted that these strategic investments will enhance the bank's financial performance, in addition to meeting regulatory capital adequacy requirements. When discussing the bank's loan book, Adiwalei mentioned a cautious approach to lending in 2017. The bank plans for a 10 to 15% growth in the loan book, emphasizing strict risk management practices, aggressive monitoring, and selective lending to sectors where risks can be effectively managed. As Union Bank celebrates its centenary milestone, Adiwalei outlined three themes for the commemoration: celebrate, impact, and lead. The bank intends to celebrate with stakeholders, demonstrate corporate citizenship through impactful initiatives like supporting displaced persons and athletes, and exhibit leadership in social innovation. Regarding the macroeconomic outlook for 2017, Adiwalei expressed cautious optimism. He noted positive indicators such as a slowdown in inflation, projected GDP growth, and improved FX liquidity due to CBN interventions. Adiwalei emphasized that the stability of the economy hinges on factors like peace in the Niger Delta region and sustained oil production levels. While positive trends are observed, he urged prudent optimism and a watchful approach. In conclusion, Union Bank of Nigeria's strong financial performance in 2016 and strategic plans for growth in 2017 underscore its commitment to innovation, customer-centricity, and sustainable banking practices. As the bank navigates opportunities and challenges in the evolving economic landscape, its focus on prudent risk management and market leadership positions it for continued success.