Asia United Bank’s net profit grows by 20% due to trading, lending

MANILA, Philippines—The Rebisco group’s banking arm Asia United Bank, the next bank to debut on the Philippine Stock Exchange, posted a 20-percent growth in net profit to P1.36 billion, in 2012, attributing it to robust trading and lending activities.

In a press statement on Wednesday, the 15-year-old AUB said non-interest income surged by 45 percent to P1.7 billion due to higher trading gains on securities sold, other operating income and fees and commissions.  Most banks posted hefty trading gains in 2012, as the 100-basis-point reduction in the central bank’s key policy rates boosted the value of bond holdings.

Net interest earnings also increased albeit at a modest pace of 2 percent to P1.81 billion as record-low interest rates pared down industry-wide interest margins.  AUB expanded its loan book last year by 24 percent to P33.59 billion, with commercial lending to top-tier corporations and medium enterprises accounting for the bulk.

AUB, which aspires to be a more significant player in the Philippine banking system, expanded its balance sheet last year by 27 percent to P63.35 billion while its capitalization went up by 25 percent to P11.5 billion.  Capital adequacy ratio to risk assets stood at 15 percent versus the minimum requirement of 10 percent.

The increase in the bank’s earning assets was supported by a 23-percent increase in deposits to P46.97 billion.

In 2012, AUB formalized its acquisitions of the Cooperative Bank of Cavite (renamed Cavite United Rural Bank) and Asiatrust Development Bank. This expanded AUB’s nationwide presence to 107 branches as of the end of 2012 to serve more customers. It plans to open 45 more branches this year and double its branch network by 2015.

It was earlier reported that AUB has made plans for an initial public offering (IPO) worth around $150 million and has mandated foreign banks UBS and Credit Suisse to arrange the equity offering.  The bank is expected to file within the next few days an application to register new securities at the Securities and Exchange Commission.

AUB is owned by a diverse group of Asian investors engaged in property development, manufacturing and other equity ventures. Republic Biscuit Corporation (Rebisco), the Philippines’ leading manufacturer, distributor, and exporter of snack food products for the past 49 years, is the biggest shareholder of the bank.