Union Bank has returned to the black with an interim net profit of HK$84.31 million after achieving improved interest income and smaller bad and doubtful debts. This is compared with the net loss of HK$577.09 million in the same period last year when the bank was plagued by large provisions for bad loans, mainly to mainland borrowers. The bank, last year, made a net loss of HK$545 million. 'The worst time of Union Bank is over,' said chief executive and managing director Chris Chan Chi-keung. During the period, the bank made a provision for bad and doubtful debts of HK$108.18 million, a substantial drop when compared with the provision of HK$656.21 million made in the first half of last year. Net interest income was up 34.2 per cent to HK$213.46 million, from HK$159.02 million. Mr Chan said the bank would continue to see a positive performance with a recovery of non-performing loans and an expansion of its business. The bank is expected this year to take back non-performing loans (NPLs) of HK$700 million from Hong Kong and the mainland. As of June 30, the consolidated NPLs fell HK$61 million to HK$3.71 billion from HK$3.77 billion. Mr Chan said the decline indicated that the NPLs problem had been kept under control. Union Bank would expand its business after Industrial & Commercial Bank of China (ICBC), the mainland's largest state-owned commercial bank, became the bank's majority shareholder, said Mr Chan. In April, ICBC agreed to buy 53.23 per cent in Union Bank from China Merchants Holdings for HK$1.8 billion.. 'We have a target to become one of the top five local banks in Hong Kong within eight years.' Union Bank also aimed to become one of the top 10 arrangers and underwriters in the local syndicated loan market within four year, he said. Having said that, Mr Chan said the business environment in the banking industry would remain competitive in the near future as the price war among banks was extending from home mortgages to other areas. In the short term, Mr Chan said, Union Bank would improve its revenue by focusing on quality business with local corporates, home mortgages, asset-based financing and trade finance. Lending to mainland borrowers would continue to decline as ICBC hoped to use Union Bank to be a vehicle to expand business in the SAR and internationally, he said. Mainland-related lending to overall loans fell to 29.2 per cent during the six months, against 31.2 per cent in last year's first half. Earnings were recorded at 19 HK cents per share, compared with a loss per share of HK$1.80 in last year's first half. Directors did not declare any interim dividend.