Union National Bank recorded a strong increase in profit to AED 615 million for the first quarter of 2015 (Q12014: AED 512 million), up by 20% year-on-year and by 41% over the preceding quarter.
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The operating profit for the first quarter of the year was AED 684 million, an increase of 22% over the same period of prior year. The operating income for the three month period ended 31 March 2015 was up by 19% to AED 935 million compared to the corresponding period of previous year driven by a strong growth in both net interest income and non-interest income.
The increase in net interest income was driven by the growth in the loan book and improvement in the net interest margin, which increased by 33 bps to 3.13% in Q1-2015 over the corresponding period of 2014 (Q12014: 2.80%). The increase in the net interest margin was due to an improvement in the asset mix and an active balance sheet management. The increase in non-interest income for the quarter was principally due to an increase in fees and commission income and trading revenues.
The loans and advances were AED 66.9 billion as at 31 March 2015, up 8% year-on-year and 4% compared to the previous year-end at the back of growth mainly in the corporate loan portfolio. The investment portfolio of the Group increased significantly by 50% year-on-year to AED 14.4 billion as at 31 March 2015 and was up by 24% in comparison to prior year end. The total assets of the Group registered healthy growth to AED 97.8 billion as at 31 March 2015, an increase of 9% over that of 31 March 2014.
Customers' deposits were AED 69.7 billion as at 31 March 2015, registering an increase of 4% compared to the corresponding period in the previous year and up by 3% in the first quarter of 2015.
The group's liquidity position remains comfortable with the liquid assets, including investments constituting 27.0% of the total assets as at 31 March 2015 (31 March 2014: 26.8%). The loan to deposit ratio was 96.0% as at 31 March 2015 (31 December 2014: 95.1%) and the advances to stable resources ratio remained comfortable at 88%, well within the regulatory requirements.
The operating expenses increased by 13% in the first quarter over the same period of 2014 as the Group continues to invest for the future. However, the cost income ratio of the Group for the first quarter further improved to 26.8% for Q1-2015 (Q12014: 28.3%) and continues to remain amongst the best in the UAE banking industry.
During the first quarter, the asset quality trend has shown consistent improvement with the ratio of non-performing loans and advances to gross loans and advances, improving by 20 bps to 3.6% as at 31 March 2015 (31 December 2014: 3.8%).
The overall loan loss coverage further improved by 200 bps in the first quarter of the year to 99.2% as at 31 March 2015. The impairment charge on financial assets for the first quarter of 2015 was AED 57 million (Q12014: AED 44 million) in line with the increased business momentum. ■