Union Bank posts positive first-half earnings

Union Bank has reported a significant increase in revenue in the first half of the year, showcasing the bank's commitment to improving operational efficiency. The bank's revenue surged by 23% to 73 billion naira from 60 billion naira in the same period last year. Oyinkan Adewale, the Chief Financial Officer of Union Bank, recently appeared on CNBC Africa to provide insights into the factors driving the bank's strong performance. One of the key areas of focus for Union Bank has been building up reserves to mitigate potential risks. Adewale highlighted that the bank has set aside a substantial provision in the second quarter to cover potentially problematic loans, resulting in a 185% provision coverage. This strategic move underscores the bank's proactive approach to risk management and ensuring financial stability. Furthermore, Union Bank's upcoming 50 billion naira rights issue is expected to support business growth and enhance regulatory compliance. The funds raised from the rights issue will be allocated towards strategic initiatives to drive the bank's performance in the coming years. Adewale indicated that the bank aims to double its return on equity post-capital raises, targeting a return of around 15%. In terms of loan portfolio management, Union Bank has taken steps to rebalance its loan book, with a focus on reducing foreign currency loans and strengthening the local currency loan segment. While the foreign currency loan book decreased by 13%, the local currency loan book saw a growth of 10% in the first half of the year. The bank plans to concentrate on sectors such as manufacturing, agriculture, food production, and retail to drive loan growth. Adewale emphasized Union Bank's shift towards commercial agriculture and large-scale agricultural projects, moving away from small-scale retail agriculture. The bank's strategic realignment aligns with Nigeria's economic growth priorities, particularly in sectors that contribute significantly to the country's development. Moreover, Union Bank is actively working to enhance its net interest margin by focusing on growing low-cost deposits and optimizing its product offerings. The bank recorded a 23% increase in low-cost deposits in the first half of the year, signaling a positive response from customers to its innovative banking products and digital channels. The utilization of digital channels, such as mobile and online banking, has enabled Union Bank to enhance customer acquisition and serve clients more efficiently. Adewale highlighted the importance of these channels in driving customer engagement and expanding the bank's reach in a competitive market landscape. As Nigeria's economy shows signs of recovery, Union Bank remains cautiously optimistic about the business outlook. With positive indicators such as stable supply, sustained oil production, and declining inflation, the bank anticipates a conducive environment for growth. Adewale expressed confidence in the green shoots of economic recovery but acknowledged the need for continued vigilance and prudent risk management. In conclusion, Union Bank's solid first-half earnings and strategic initiatives position the bank for growth in key sectors such as manufacturing and agriculture. By aligning its loan portfolio with economic priorities and leveraging digital channels for customer acquisition, Union Bank is poised to capitalize on emerging opportunities in Nigeria's evolving financial landscape.