AEV announces UnionBank and CitySavings expansion

CEBU, Philippines - The Aboitiz Equity Ventures (AEV) announced the further expansion of its banking group, Union Bank of the Philippines (UnionBank) and the City Savings Bank (CitySavings) following the encouraging financial performance report posted by both companies last year.

AEV senior vice president and chief information officer (CIO) Steve G. Paradies said that both banks will have an aggressive move this year to provide wider options in terms of offering consumer loans to clients.

Although Union Bank will try to optimize its operations, consolidating some redundant branches while gearing towards fattening its client base.

Paradies said Union Bank will continue to strengthen its customer franchise through enhanced retail focus and a stronger sales management approach.

It will likewise pursue investments in technology and rationalized branch network in strategic areas to maximize growth channels for deposits and loan accounts.

“Initiatives to be taken will continue to focus on increasing its overall market share,” Paradies said.

On the other hand, Its thrift bank arm—City Savings Bank will add more branches specifically in Luzon, while intensifying its strength in offering attractive “teachers’ loan” facility.

City Savings Bank will allocate at least P10 million to P15 million in every new branch opened. Last year, the bank has opened three branches in the Luzon area.

Paradies said the operation of the City Savings will remain committed to its expansion strategy with the end goal of having a nationwide presence and becoming the preferred lending institution of public school teachers across the country.

Robust earnings performances of both UnionBank and CitySavings, coupled with the bottomline effect of the increased ownership of AEV in both banks, resulted to a net earnings contribution of P3.4 billion in 2011, 31 percent higher than the previous year.

UnionBank ended the year with an earnings contribution of P2.9 billion, up by 26 percent. Apart from the effect of increased ownership, UnionBank’s bottomline for this period grew by 23 percent.

Meanwhile, AEV’s non-listed thrift bank, CitySavings, contributed earnings of P531 million in 2011, 69 percent higher than 2010.

AEV president Erramon Aboitiz reported that the full year impact of increased ownership coupled with a seven percent year-on-year improvement in earnings accounted for the income expansion.

The robust growth of CitySavings lending activities resulted to a 29 percent expansion in the bank’s net interest income.

However, a 36 percent increase in operating expenses that resulted from the implementation of the CitySaving’s expansion program and its various initiatives during the year, tempered the bank’s profitability.

On a combined basis, total interest income from the conglomerate’s banking group grew by three percent to P13.7 billion.

Gross loan book ended the year at P97 billion, recording a 20 percent expansion from 2010. Both banks have NPL (non-performing loan) ratios that remain below industry averages and are adequately reserved.

Branch expansion initiatives by both banks brought on a seven percent increase in their combined total deposits, ending 2011 at P212 billion. — (FREEMAN)