The Aboitiz Group’s lender Union Bank of the Philippines has successfully raised P10 billion from its stock rights offering which it reported as having robust participation from shareholders.
In a disclosure to the Philippine Stock Exchange, the bank said it offered 327.12 million common shares at P30.57 per share. These rights shares were made available to eligible shareholders, at a ratio of 1 rights share for every 9.1382 existing common shares held as of the record date of May 9, 2024.
The new rights shares were issued by the bank and listed on the PSE on May 31, 2024. Following the issuance, UBP’s total outstanding shares increased from 2.99 billion common shares to 3.32 billion common shares.
The stock rights offering was fully subscribed to by UnionBank’s principal shareholders — Aboitiz Equity Ventures, the Social Security System, and Insular Life.
“The strong response from our shareholders to the Stock Rights Offering underscores their confidence in our strategic objective to become the best retail bank in the country,” said UnionBank President and CEO Edwin R. Bautista.
CLSA Exchange Capital, Inc., and Unicapital Inc. acted as Joint Underwriters for the Offering while Citigroup Global Markets Limited acted as Capital Markets Adviser.
UnionBank said net proceeds will be used to support the Bank’s strategic growth initiatives including to fund the capital infusion to UnionDigital, projected retail loan availments, and for general corporate purposes.
The bank expects to perform better in the coming quarters after reporting a 41 drop in net income to P2 billion for the first quarter of 2024 from the P3.4 billion earned in the same period last year due to costs related to the integration of Citi’s consumer business.
“Our first quarter performance is in line with our expectations. We are even ahead in terms of key metrics that matter for sustainable growth, such as number of retail customers, net interest margins, and fees-to-assets,” said UnionBank Chief Financial Officer Manuel R. Lozano.
He noted that, “Now that we have successfully completed the Citi migration, we will no longer bear the one-time costs associated with it starting this month. We will now focus our efforts to realizing the full gains from cross-selling to our growing customer base.”
The bank said its topline revenues remain strong, growing by 14 percent to P18.35 billion from P16.1 billion in the first three months of 2023.
“This is attributable to the growing proportion of consumer loans, higher net interest margins, and transaction fees,” it added.
Net interest income grew by 17 percent to P13 billion driven by a 59bps improvement in net interest margins now standing at 5.7 percent. Non-interest income excluding trading gains, went up by 13 percent to P4.7 billion.
The Bank said its consumer loans now account for 59 percent of total loan portfolio, nearly three times higher than industry average.
UnionBank allocated resources towards the migration of the acquired Citi Consumer business into UnionBank systems. While this temporarily affected our profitability, it was a planned initiative aimed at unlocking long- term benefits and efficiencies.
On March 24, 2024, the Bank successfully completed the final phase of the Citi integration, which involved the transfer of millions of customer and transaction records from Citi to UnionBank’s platforms.
The Bank's operating expenses rose by 10 percent to P11 billion, driven by IT-related costs supporting the successful migration of Citi retail accounts into UnionBank systems.
A one-time integration cost of P1.1 billion was incurred in the first quarter of 2024.