UnionBank profit up 22% in Q1

MANILA, Philippines — Earnings of Aboitiz-led Union Bank of the Philippines jumped by 22 percent to P2.6 billion in the first quarter of the year from P2.2 billion in the same quarter last year despite booking higher loan loss provisions amid the coronavirus pandemic. 

Jose Emmanuel Hilado, treasurer and chief financial officer at UnionBank, said it earmarked higher provision from January to March this year in anticipation of the potential impact of the coronavirus disease 2019 or COVID-19 pandemic on the bank’s credit portfolio 

“We deemed it prudent to set aside higher provisions for the year given the uncertainties brought about by this unprecedented health crisis,” Hilado said.

Provision for loan losses increased amounted to P1.3 billion in the first quarter of the year, 7.6 times the P174.6 million provisioning made in the same quarter last year. 

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

Revenues of the country’s 10th largest lender in terms of assets surged by 37 percent to P9.5 billion as net interest income zoomed by 47 percent to P6.8 billion. 

The bank’s loan book expanded by 24 percent to P391.8 billion in the first quarter amid the rise in commercial lending with 35 percent, consumer loans with 34 percent, small and medium enterprises (SMEs) with 25 percent, and credit cards business with 15 percent. 

The bank reported that margins rose by 114 basis points to 4.5 percent from 3.4 percent driven by lower funding costs resulting from the expansion of deposits as well as the decision of the Bangko Sentral ng Pilipinas (BSP) to cut interest rates and lower the reserve requirement ratio. 

UnionBank president and chief executive officer Edwin Bautista said the listed bank 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. We encourage everyone to bank from home and take advantage of the features of our UnionBank online app such as digital account opening, online check deposits, fund transfers, and remittance to partner outlets,” Bautista said.

S&P Global Ratings expect Philippine banks to book $2 billion in credit losses arising from delinquent and bad debt that is likely to default this year amid the health crisis.

BDO Unibank Inc., owned by the family  of the late retail and banking magnate Henry Sy, and Ayala-led Bank of the Philippine Islands posted lower net earnings in the first quarter of the year after booking higher provision for loan losses.