Earnings Update- UNION BANK: 9M 2019.

Revenue for Union bank maintained a downward trend as the group ended the third quarter with a 4.13% decline in gross earnings. Weaker revenue was driven by the declines in interest income (-1.59%) and non-interest income (-11.69%), despite the 11.70% expansion of its loan book to keep with the revised loan-to-deposit regulatory minimum. Union’s cost-cutting initiatives coupled with significant credit writebacks and cash recoveries ensured the bank delivered a 3.60% growth in PAT to NGN15.19bn. We revised our 2019FY growth projections in gross earnings (-1.93%) downwards. We, however, expect a 6.59% growth in PAT to NGN19.29bn premised on the debt recovery effort and operational efficiency initiatives which continue to yield positive results. We also hold that the proposed balance sheet restructuring, which will wipe out the bank’s accumulated losses of NGN47.74bn as at 2018FY, subject to the court’s approval, will significantly improve Union bank’s ability to finally declare dividends by 2019FY. Kindly find attached the full report.

Revenue for Union bank maintained a downward trend as the group ended the third quarter with a 4.13% decline in gross earnings. Weaker revenue was driven by the declines in interest income (-1.59%) and non-interest income (-11.69%), despite the 11.70% expansion of its loan book to keep with the revised loan-to-deposit regulatory minimum. Union’s cost-cutting initiatives coupled with significant credit writebacks and cash recoveries ensured the bank delivered a 3.60% growth in PAT to NGN15.19bn. We revised our 2019FY growth projections in gross earnings (-1.93%) downwards. We, however, expect a 6.59% growth in PAT to NGN19.29bn premised on the debt recovery effort and operational efficiency initiatives which continue to yield positive results. We also hold that the proposed balance sheet restructuring, which will wipe out the bank’s accumulated losses of NGN47.74bn as at 2018FY, subject to the court’s approval, will significantly improve Union bank’s ability to finally declare dividends by 2019FY. Kindly find attached the full report.