Union Bank profit jumps 58% to P2.57B

The Union Bank of the Philippines (Union Bank) has recorded a net income of P2.57 billion for the first nine months of 2007, or 57.67 percent higher than the P1.63 billion recorded in the same period last year.

The commercial bank of the Aboitiz Group Bank has surpassed the full year 2006 profit of P2.51 billion.

The 2007 target net income was placed at P3.5 billion or roughly 40 percent higher than the 2006 figure.

Operating income jumped 36.8 percent to P6.84 billion in from the P5 billion recorded in the first nine months of previous year.

Gross interest income from loans increased by 25.69 percent to P2.74 billion from P2.18 billion.

Service charges, fees and commissions went up by 15.25 percent to P630 million in the same period.

Asset base expanded to P171.36 billion as of end September, or P25.61 billion up from P145.75 billion in the same month last year.

Loan portfolio increased by 16.62 percent to P41.4 billion from P35.50 billion while deposits stood at P105.48 billion.

Strong internal capital generation and proceeds from the recently concluded follow-on equity offering increased capital base by 46.54 percent to P26.04 billion by end September this year,  from P17.77 billion in the same period in 2006.

The branch network of acquired International Exchange Bank (i-Bank) has been fully integrated into the Union Bank system, allowing both UnionBank and former iBank clients to transact in 186 branches nationwide free of interbank charge on deposit and withdrawal transactions.

Since the merger last year, UnionBank realized almost P500 million in cost savings. More cost synergies are expected to be realized from the elimination of overlaps and the implementation of better systems and updated technologies.

Last year, net income dropped by 8.8 percent to P2.51 billion from P2.76 billion, attributed directly to the industry-wide margin compression as interest rates declined further.

Union Bank said the acquisition of iBank as well as organic expansion pushed asset base to P184.8 billion last year, equivalent to a growth rate of 72.8 percent. Deposits almost doubled to P116 billion.

At the start of 2007, the bank’s capital adequacy ratio (CAR) stood at 16 percent from a high of 46. That was due to the purchase of the 98-percent stake in iBank in June 2006.