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Sri Lanka's Union Bank December net Rs78mn, cuts bad loans

Feb 25, 2016 10:26 AM GMT+0530 | 0 Comment(s)

ECONOMYNEXT - Sri Lanka's Union Bank of Colombo said it made net profits of 78 million rupees in the December 2015 quarter compared with a loss of 47 million rupees the year before.

The group, now owned by Culture Financial Holdings Ltd., an affiliate of global private investment firm TPG, reported earnings of 0.07 rupees per share for the quarter.

In the 12-months to December 2015 Union Bank group reported earnings of 0.19 rupees per share on total profits of 223 million rupees, up 617 percent from the previous year.

The group’s subsidiaries are National Asset Management Limited and UB Finance Limited.

At stand-alone bank level interest income rose 11 percent to 1.2 billion rupees in the December 2015 quarter and interest expenses rose at a faster 51 percent to 683 million rupees, with net interest income down 19 percent to 484 million rupees.

Annual interest income at stand-alone bank level rose 5 percent to 4.2 billion rupees and interest expenses fell 3 percent to 2.1 billion rupees, with net interest income up 15 percent to 2 billion rupees.

“Net interest margins dropped due to decreasing spreads and increased investments made in Unit Trusts during the year,” a statement said.

Annual fee and commission income rose 15 percent to 227 million rupees with net gains from trading up 189 percent to 278 million rupees.

Other income went up 28 percent to 359 million from a year earlier mainly attributed to the 73 percent growth in foreign exchange gains.

The bank’s composition of loans changed in line with its new strategic positioning as a fully-fledged commercial bank serving a wider clientele including corporate, small business and retail banking, the statement said.

“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 endeavour to grow fee and commission income.”

UBC said that in 2015 it made a strategic decision to exit the equity trading portfolio and held no trading stocks as at the year end.

Impairment for bad loans fell 16 percent to 78 million rupees during the 2015 year.

“The bank was affected with one of the highest NPL ratios in the industry in mid-2014,” the statement said.

“The NPL ratio improved significantly to 2.7 percent as at the reporting date. NPL ratios as at the end of 2014 was 7.4 percent.”

The bank’s loans grew by 55 percent to 40 billion rupees in the year to December 2015 while deposits grew 59 percent to 46 billion rupees. (Colombo/Feb25/2016)


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