UnionBank earnings steady at P12.7 billion in 2022

MANILA, Philippines — The earnings of Union Bank of the Philippines remained almost unchanged at P12.7 billion last year, as revenues grew by 16 percent to hit a record high of P52.2 billion from P45.1 billion in 2021.

UnionBank president and CEO Edwin Bautista said the bank made a commitment to execute on key strategic imperatives at the start of 2022.

These include the seamless integration of the acquired Citi consumer business, which includes customers and employees, as well as the commercial launch of UnionDigital as one of the six digital banks licensed by the Bangko Sentral ng Pilipinas (BSP).

“We delivered on our promise and the market has rewarded us for it. Our recent stock performance, increase in stock trading volumes, and the strong commitment from our major shareholders on our stock rights offering reflect shareholders’ trust in the value that will be created from the execution of our strategies,” Bautista said.

The earnings result of the Aboitiz-led bank translated to a return on average equity of 9.7 percent, which takes into consideration the impact of the P40 billion additional capital coming from the stock rights offering in May last year.

According to UnionBank, revenues mainly came from net interest income and fee-based income, which compensated for the absence of trading gains.

Likewise, the bank reported a 31-percent jump in net interest income to P38.9 billion from P29.8 billion on account of higher margins and volume.  Net interest margins expanded by 27 basis points to 4.9 percent, driven by the higher proportion of consumer loans to total loans and the robust growth of low-cost CASA deposits.

The bank said fees and other income doubled to P13.4 billion largely due to the consolidation of the acquired Citi consumer business, as well as growing digital customer transactions.

UnionBank executive vice president and chief finance officer Manuel Lozano said that the shift in digital also allowed the bank to grow fees coming from mobile fund transfers and payments.

“In 2022, we witnessed a momentous shift in our business model. We have a solid balance sheet that continues to provide us above industry net interest margins… We were able to book the same bottomline as the previous year, but with less reliance on trading,” Lozano said.

The bank’s loan book expanded by 42 percent to P479.2 billion amid the combined growth in UnionBank, CitySavings, and the acquired consumer business of Citi.

Likewise, its deposit base jumped by 25 percent to P711.3 billion from P570.5 billion due to the overall expansion of the retail customer base and the strong take up of cash management products from large corporates.

UnionBank’s total assets surged by 31 percent to P1.1 trillion last year from P831.1 billion in 2021.

The bank ended up shelling out P72 billion instead of P55 billion for the acquisition of Citi’s retail banking business in the Philippines. As of end June last year, the net asset value of Citi’s business stood at P26.7 billion plus a premium of P45.3 billion.