Kicking off the banking sector earnings, Union Bank of Colombo PLC reported notably better performance in the June quarter (2Q23) on the back of substantially lower impairments made against loans along with stringent recovery measures. 
The bank reported a net interest income of Rs.1.72 billion for the period, up 4 percent year-on-year (YoY) as it managed to increase the net interest margin slightly. 

The bank managed to record an interest margin of 4.83 percent by the end of June from 4.69. 
Union Bank however didn’t yet see a growth in the loan book during the quarter under review as loans continued to contract although the bank initiated programmes to acquire new customers after nearly a year-long hiatus. 

“During the period under review, the bank initiated several customer acquisition programmes with focus on business expansion. The bank’s refinance schemes enabled the SME banking sector to reach a wider customer base for funding opportunities including women entrepreneurs,” Union Bank said in a press release.
In a sign of normalising economic conditions, the bank saw its impairments falling to Rs.297.4 million in the quarter from Rs.885.9 million in the year earlier period. 
The bank does not have investments in international sovereign bonds, and development bonds held by the bank have matured and are awaiting settlement.  The bank’s so-called impairment 3 ratio was at 10.5 percent compared to 8.19 percent at the beginning of the year. 
While the operating expenses rose by 19 percent due to the increased salary bill, utility tariffs and exchange impacted general expenses, the bank reported a pre-tax profit of Rs.492.4 million for the quarter compared to Rs.92.2 million in the same period last year. 
The bank reported earnings of Rs.185.8 million or 17 cents a share for the quarter under review compared to a loss of Rs.27.1 million or 3 cents a share in the corresponding period last year.

The private equity firm Culture Financial Holdings Limited held 70.84 percent stake in Union Bank by the end of June 2023.  
However, the bank didn’t provide an update on potential change in controlling stake disclosed on December 1, 2022.
It was disclosed that the major shareholder of Union Bank had entered into a share sale and purchase agreement with a private equity fund owned by Nepal’s CG Corp Global controlled by billionaire Binod Chaudhary to sell its entire stake in the bank.