In a disclosure sent to the Philippine Stock Exchange (PSE) earlier this week, Union Bank of the Philippines (UnionBank) reported generating positive earnings in the first quarter of this year, hitting a P3.4 billion net income, which is 30% higher compared to the same period last year.
UnionBank also posted higher balance sheet numbers, with total assets as of the first quarter hitting P1.1 trillion, up by 30% versus last year’s Q1 levels.
UnionBank’s office in Ayala (IMAGE CREDIT: www.facebook.com/ubp.ayala.sss)
The earnings were attributed to the growth of the bank’s consumer loan and the acquisition of Citi’s local business. Proceeds from the Citi consumer business, acquired in a blockbuster deal last year, contributed P3 billion to the bank’s income as well.
Fees and gains on the sale of investment securities rose by P82% to P4.2 billion, propelled by the growth of digital and card-related transactions. Trading income also improved to P407 million, up from a loss of P241 million compared to the same period last year.
Net loans and receivables also grew to P490 billion, showing a 39% increase. Total deposits rose by 20% to P692.9 billion, which, according to the bank, “reflected a healthy growth of the cash management and retail banking segments.”
UnionBank to grow its retail banking segment
The Aboitiz-led financial institution is now also looking to grow its retail banking segment, leaning into its recently acquired credit card business from Citi.
“We are geared up to grow our retail banking business. Our infrastructure is ready for scale. We have sufficient capital coming from the recent stock rights offering to further grow our earning asset base,” said Edwin Bautista, President and CEO of UnionBank, in a press release.
“UnionDigital is already profitable after less than a year in operation. There is strong momentum in the acquired credit card business from Citi. New-to-bank card customers are also at a record level,” he added.
For his part, Manuel R. Lozano, Executive Vice President and Chief Financial Officer of UnionBank, said, “Our retail focus has allowed us to preserve our margins against a backdrop of continued policy rate hikes. We expect our core income to improve throughout the year as we grow our consumer portfolio.”
Alongside the greater revenue, operating expenses also ballooned by 67% to P3 billion from P1.9 billion, with increases in salaries and employee benefits, taxes, depreciation and amortization, and occupancy.
Miscellaneous expenses, in particular, soared by 79% to P4.95 billion from P2.77 billion.
“Our expenses this year are still elevated due to one-offs, as we are effectively running on two systems to integrate the acquired Citi consumer business into ours. Once we complete the migration this year, we’re confident that we will once again generate a double-digit return on equity,” Lozano added.
In the first quarter of 2022, UnionBank had seen its net revenues jump by 57%, reaching P16.1 billion. The bank’s net interest income also grew to P11.5 billion (43% increase), with strong consumer loan growth in UnionBank, CitySavings, and UnionDigital paving the way.
Overall, net income margins widened to 5.21%, higher by 54 basis points.