'Extraordinary trading gains' last year sink UnionBank profits in Q1

MANILA, Philippines — Earnings of Aboitiz-led Union Bank of the Philippines tanked by over 40% year-on-year in the first quarter, which the company blamed on “extraordinary trading gains” a year ago.

UnionBank netted P2.6 billion in the first three months of the year, 45% lower compared with the same period last year, the company told the stock exchange on Monday.

The company is yet to release its full financial results, but it said net income grew 40% quarter-on-quarter as easing mobility restrictions allowed the bank to trim the rainy-day funds it set aside to cover potential losses from unpaid loans amid the pandemic.

Broken down, UnionBank’s recurring income grew 21% on-year in the first quarter, boosted by 12% growth in net interest income and an uptick in fee-based income, which more than doubled to P1.4 billion as more Filipinos embrace cashless transactions to avoid virus contagion.

“The optimism generated by the reopening of the economy is palpable and if the pandemic is behind us, we are hopeful that the economic gains since 2021 are sustainable,” Jose Emmanuel Hilado, the bank’s treasurer and corporate planning services head, said in a statement.

“We, therefore, remain optimistic that improving credit appetite and spending patterns will allow us to sustain momentum in our recurring income for the rest of 2022,” Hilado added.

As of first quarter, UnionBank’s total assets grew 13% year-on-year to P844.4 billion. Total deposits, considered a lifeline for banks, went up 15% annually to P577.2 billion.

Those figures are bound to grow even more as UnionBank completes its acquisition of Citi's consumer banking business in the Philippines — a massive transaction that recently received a clearance from antitrust regulators. “We remain confident to become the legal owner of the consumer portfolio by July 2022,” Edwin Bautista, company president and CEO, said.

At the same time, UnionBank said its upcoming digital bank, UnionDigital, is on-track to launch by the second half of the year.

On Monday, shares in UnionBank shed 0.91% to close at P81.30 each. — Ian Nicolas Cigaral