Aboitiz-led Union Bank of the Philippines (UnionBank) logged a 20 percent decline in its net income to P8.1 billion in the first nine months of this year from P10.1 billion in the same period in 2022.
However, the bank reported a 48 percent rise in its revenues to P52.8 billion in this year’s nine-month period compared to P36 billion last year, according to a disclosure to the Philippine Stock Exchange (PSE).
The bank attributed the higher revenues to strong business fundamentals, and focus on the consumer segment. UnionBank currently has more than 13 million customers, averaging two million new customers per year from 2019.
“Our diversified consumer business allowed us to cover for the one-time costs that we needed to recognize this year. If we exclude the impact of these non-recurring costs, our ROE would be in double digits. Our topline revenues remain strong. We are confident that once we complete the integration, we can show above-industry profitability we have been known to deliver,” said UnionBank President and CEO Edwin R. Bautista.
Net interest income grew 34 percent to P37.3 billion, in large part brought by an 18 percent increase in the bank’s loan portfolio. Consumer loans also grew faster at a pace of 22 percent year-on-year.
The bank has a 56 percent proportion of consumer to total loans, one of the highest in the industry, leading to a net margin of 5.3 percent, which is above-industry rates.
Non-interest income rose to 93 percent to P15.5 billion due to recurring fee-based income on customer transactions.
Total assets as of September this year is up by eight percent to P1.1 trillion this year from P1.05 trillion last year. Net loans and receivables also increased 18 percent to P531 billion, and total deposits by six percent to P724.7 billion.
Operating expenses notably increased from P21 billion last year to P33 billion because of one-time integration costs related to its Citi consumer business acquisition.
UnionBank Executive Vice President and Chief Financial Officer Manuel R. Lozano said that “costs were higher in the third quarter mainly due to integration and other costs that are non-recurring.”
“The integration costs increased since we allocated more time and resources to ensure smooth migration of the acquired Citi consumer business. We also spent on marketing and customer engagement programs to capitalize on the growing consumer segment,” Lozano explained.