UnionBank posts lower net income in 9 months

MANILA, Philippines — The net income of Aboitiz-led Union Bank of the Philippines dropped by almost five percent in the first nine months as it recorded lower margins owing to higher interest rates and absence of new loans to teachers.

Jose Emmanuel Hilado, UnionBank treasurer and chief financial officer, said the bank’s net income from January to September declined by nearly five percent to P6.1 billion from the P6.4 billion posted in the same period last year.

“The rise in interest rates and the absence of new loan releases to teachers have affected our margins,” Hilado said in a statement.

“We expect margins to improve as assets reprice and now that CitySavings’ access to DepEd’s automatic payroll deduction system has been resolved,” he said.

Earlier this year, the Department of Education (DepEd) revised its guidelines for the accreditation of entities under the Automatic Payroll Deduction System Program.

UnionBank’s net revenues as of end-September rose by more than two percent to P18.9 billion from P18.3 billion a year ago.

Its earnings performance translated to an annualized Return on Equity (ROE) and Return on Average Assets (ROA) of 11 percent and 1.3 percent, respectively.

Hilado said the bank also sustained double-digit growth on its customer businesses.

It released total loans amounting to P315.3 billion during the period, 18.6 percent higher from a year ago. Retail loans accounted for 33 percent of the total loan portfolio.

Deposits also reached P441.4 billion, supporting the 17 growth in UnionBank’s total assets to P643 billion from P549.4 billion in the same period in 2017.

Going forward, Hilado expressed confidence the bank would sustain its robust asset growth on the back of its successful P10 billion rights offering.

“We continue to refine our transformation strategy toward delivering superior customer experiences. Our mobile banking app was recognized as the Online Banking Initiative of the Year in the 2018 Asian Banking & Finance Awards,” Edwin Bautista, UnionBank president and chief executive officer, said.