UnionBank to weather COVID crisis

Lawrence Agcaoili (The Philippine Star) - May 25, 2020 - 12:00am

MANILA, Philippines — Union Bank of the Philippines is confident it is strong enough to survive the economic fallout from the coronavirus disease 2019 or COVID-19 pandemic.

Jose Emmanuel Hilado, treasurer and chief finance officer at UnionBank, told The STAR the Aboitiz-led bank is prepared to weather the outbreak.

“The bank is prepared and in a good position to weather this challenge coming from a record year in 2019,” Hilado said.

Earnings of UnionBank more than doubled to a record P14 billion last year from P6.87 billion in 2018 on the back of a double-digit loan growth. 

For the first quarter, the bank’s net income increased by 22 percent to P2.6 billion from P2.2 billion in the same quarter last year despite booking higher loan loss provisions due to the pandemic.

“We normally do not give income guidance, but suffice it to say that earnings are within expectations so far, and it really depends on how the rest of the crisis will play out,” he said. 

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

“We think this is sufficient given current conditions, but as we all know things are very fluid and there is no precedent for this type of crisis, it being health-driven,” Hilado said.

He explained loan losses might be higher than usual and loan growth might be stunted.

“We don’t expect growth to be as high as the prior year given the impact of the community quarantine. We cannot provide a guidance for now given the uncertainty of the situation,” he said.

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

Hilado said the Aboitiz-owned bank is spending P2.5 billion for its capital expenditures this year, about 70 percent of which would fund the bank’s digitalization efforts.

He reiterated brick and mortar, particularly opening more branches, is no longer part of the bank’s strategy.

He said the bank is converting more branches to “ARK”-type, fully digital branches, an integral part of the bank’s digitization plan.

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