Union Bank H1 net jumps by 52%

Union Bank of the Philippines posted a 52-percent year-on-year profit growth in the first semester to P6.2 billion on robust trading gains coupled with the expansion in net interest and fee-based earnings.

For the second quarter alone, net profit soared by 79.5 percent from a year ago to P2.19 billion, based on a regulatory filing.

These results translated to a return on equity of 24 percent, improving from last year’s 18.9 percent. The return on assets at 3.8 percent is likewise one of the highest in the local banking industry, Union Bank president Victor Valdepenas said.

Asked whether the bank would upgrade its 2013 targets, Valdepenas said that given the volatility in the capital markets and the higher element of uncertainty in the second half, Union Bank would for now stick to its 15-20 percent profit growth goal over the P7.6 billion net profit booked last year.

“While we thought it will be challenging year, we were happy that we were able to deliver, courtesy of the capital markets,” Valdepenas said.

At the same time, Valdepenas said other sources of income from customer-based franchises had expanded, noting the improved productivity of Union Bank’s 186-branch network.

“All our productivity ratios are very high, including revenue-to-expense ratio which was almost 3 times—the highest in the industry.”

Key business segments grew in the first six months compared to the same period last year as follow:

Net interest income improved by 10.6 percent to P4.06 billion

Net trading gains grew by 70 percent to P5.61 billion

Services, charges, fees and commissions breached the P1 billion mark, surging by 164 percent

The bank’s net interest margin was steady at 3.4 percent. “It’s because the reduction in terms of asset yield was compensated by reduction in funding cost,” Valdepenas said.

Loan book expanded by 14 percent year-on-year to P99.74 billion while total deposits rose by 54 percent to P259.55 billion.

He pointed out that the bank had been building up its low-cost current account/savings account deposits which now amounted to about P70 billion from only P40 billion a year ago. The strong growth in deposits allowed the bank to grow its balance sheet by about 22 percent to P340.8 billion from the end-2012 level. Doris C. Dumlao