Union Bank June profits edge up

Union Bank of Colombo PLC reported slightly higher profits during its April – June quarter (2Q18) as the bank could not escape from the industry-wide phenomenon of stress building up on loans amid challenging economic conditions. 

The small-sized lender with an asset base of Rs.114. 4 billion reported net interest income of Rs.1.15 billion during the three months up to June 30, 2018, up 22 percent from the same period, last year. 

The increase in the top line was assisted by the expansion in the margins as the growth in new loans during the first six months remained weaker.  

The net interest margin increased slightly to 3.06 percent from 2.87 percent in December 2017 as the bank had increased its loan yields. The new loans grew by Rs.1.8 billion or 2.5 percent during the first six months. The bank has a loan book of Rs.73.3 billion, and 3.18 percent of those loans are in the non-performing category, up from 2.69 percent in December 2017. 

The bank’s first set of 2Q financial accounts to be released— clearly reflect the common industry phenomenon of weakening asset quality and slowdown in growth in new loans.