Union Bank records notable growth in 2015


Indrajith Wickramasinghe - CEO

Union Bank of Colombo PLC (UBC) and its subsidiaries concluded the year 2015 with a notable business performance; reflected by a 226% increase in post-tax profit that signals the strong growth momentum mobilised within the year.

The principal source of income from the Bank's fund based operations escalated to Rs. 2,022 Mn in 2015. This is an increase of Rs. 259 Mn or 15% compared to Rs.1,763 Mn recorded in the previous year. It is a noteworthy achievement, given the substantial reduction in interest spreads experienced by the Bank during the year.

Net Interest margins dropped due to decreasing spreads and increased investments made in Unit Trusts during the year. Return on the Unit Trust investments are reflected under Net Trading Income of the Bank.

The Bank's Loans and Advances stood at Rs. 40,095 Mn as at 2015 year-end. This is a Rs. 14,151 Mn (55%) growth in comparison to the previous year, and is the highest absolute growth achieved by the Bank since its inception.

The composition of Loans and Advances of the Bank changed in line with its new strategic positioning,asa fully-fledged commercial bank serving a wider clientele including Corporate, SME and Retail Banking segments. Corporate Banking contributed to the highest portion of the growth, given that the Bank employed focused efforts to strengthen its corporate loan book in 2015, in an endeavor to grow fee and commission income.

UBC revamped its Retail Banking proposition in 2015, with a broader product spectrum aided by aggressive network growth; while consciously narrowing the pawning portfolio to reduce the risk appetite. The Deposits Base of UBC stood at Rs. 37,652 Mn as at year-end. This is a Rs. 9,844 Mn (35%) growth in comparison to 2014. The growth in Fixed Deposits was recorded asRs. 7,719 Mn.

The Bank focused on an aggressive CASA (Current and Savings Accounts) drive which was supported by several strategic initiatives such as; the expansion of the off-site ATM network, introduction of Debit Cards, setting up a dedicated sales force and rebranding the branch outlook. CASA recorded a growth of 33% in comparison to 2014.

The Fee and Commission Income of the Bank was Rs. 226 Mn which translates to a year-on-year growth of 15%. This was mainly attributed to the increase in fee and commission income from Loans, Cards, Trade and Remittances. The Bank made significant efforts to strengthen its fee and commission based businesses, and plans to leverage the key enablers that were established during 2015.

UBC reported a Net Trading Income of Rs. 278 Mn, which is a significant growth of 189% year-on-year. This was due to an increase in investments made in the Unit Trusts.In 2015, UBC made a strategic decision to exit the equity trading portfolio and held no trading stocks as at the year end.Other Operating Income of the Bank was Rs. 359 Mn, which reflects a growth of 28% year-on-year. This was mainly attributed to the 73% growth reported in Foreign Exchange gains. (Union Bank)

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