UnionBank hikes loan loss provision by 750%

Published April 27, 2020, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

Union Bank of the Philippines (UnionBank) increased its loan loss provisions by 750 percent to ₱1.3 billion in the first quarter this year in response to potential losses as a result of COVID-19 lockdown.

The bank disclosed this Monday as it announced a net income of ₱2.6 billion as of end-March, up 22 percent year-on-year. It also reported higher revenues of ₱9.5 billion or more than 37 percent year-on-year, boosted by a 47 percent increase in net interest income of ₱6.8 billion.

UnionBank CFO and treasurer, Jose Emmanuel Hilado, said they “deemed it prudent to set aside higher provisions for the year given the uncertainties brought about by this unprecedented health crisis.”

“Our solid financial performance and capital base shall provide us the cushion to withstand the economic impact of the enhanced community quarantine,” said Hilado.

UnionBank said it “allotted higher provisions in the first quarter of the year in anticipation of the potential impact of the COVID-19 pandemic on the bank’s credit portfolio.” Its loan loss provisions amounted to ₱1.3 billion in the first quarter versus ₱174.6 million same time in 2019.

In the meantime, UnionBank president and CEO Edwin Bautista said the bank, the country’s 10 biggest bank, will continue to support its clients and the economy by providing liquidity as required.

“UnionBank is committed to support the economy and its customers by ensuring access to liquidity and other financial needs amid this crisis. Our branches remain open to the public and our digital channels are highly accessible,” said Bautista.

In the first three months, the bank’s customer loans went up by 24 percent to ₱391.8 billion on the back of its commercial lending growth which was up by 35 percent year-on-year. Consumer loans were up by 31 percent while its SME banking grew by 25 percent year-on-year.

“Margins rose by 114bps to 4.5 percent from 3.4 percent in the previous year, driven by lower funding costs resulting from the expansion of CASA deposits (up 22 percent year-on-year), as well as from BSP’s (Bangko Sentral ng Pilipinas) cuts in policy rate and reserve requirement ratio,” said UnionBank.