Union Bank shifts focus to retail deposits, targets 15% loan growth

In line with its determination to grow its deposit, Union Bank has shifted its focus to retail customers to generate low-cost deposits while also improving margins.

According to the bank’s Chief Financial officer, Oyinkan Adewale, Union bank’s growth focus this year will be led byretail business. “In an environment where corporate customers are hampered by FX and macro-economic issues, we will be cautious on the lending side,” she said.

She disclosed this recently in a telephone conversation, adding that the loans grew by 13 percent in the first half of 2015, but the bank had to slow growth towards the end of the year due to weak market conditions in Nigeria triggered by the plunge in oil prices.

Union Bank intends to see loan growth of between 10 to 15 percent this year, she said, adding that the bank is trying to build up its loan book after it sold bad loans to state-owned “bad bank” AMCON five-years ago as part of an industry bailout.

ALSO SEE: Union Bank 2015 Pre-tax Profit dips 47.5%

Last week, Union Bank reported a 47 percent fall in pretax profit to 14.5 billion naira ($72.9 million) for 2015. Adewale said profits actually grew by 24 percent when adjusted for the one-off item of sale of subsidiaries in 2014, which did not re-occur in 2015.

Adewale said the bank expected 15 percent deposit growth this year, up from 4 percent last year, on the back of its retail banking strategy.

Domestic banks have been settling letters of credit to foreign banks by instalments which can go up to six tranches, Adewale said, a delay forced on lenders as central bank rations dollars to conserve reserves.

She said Union Bank has sold its non-bank units to focus on its core lending business and will pursue loan recoveries this year after non-performing loans grew to 6.9 percent in 2015, up from 5.1 percent at the end of 2014.