Rebisco group-led Asia United Bank (AUB) expects to grow its total resources by about 15 percent this year as it continues its branch rollout, expands its lending portfolio and sustains a vast pool of low-cost funding.
AUB president Abraham Co told reporters after the bank’s stockholders’ meeting last week that the bank’s balance sheet could end the year at P190 billion compared to P165.5 billion last year.
Co reported to shareholders that AUB’s focus this year would be to continue its branch rollout, aggressively grow the retail lending business, further increase low-cost funding sources and raise the deposits-to-loan ratio to sustain its already high capital adequacy ratio of 18.1 percent of risk assets.
This year, AUB expects a double-digit growth in net profit, tracking the projected growth in earning assets.
In 2016, the bank grew net profit by 53 percent to P2.3 billion. While AUB could maintain a double-digit growth in profit this year, Co said it would not be as high as the growth posted last year.
On the bank’s branch expansion program, Co said AUB would likely open an average of 30 new branches each year. To date, the bank has 239 branches employing 2,234 people.
AUB also plans to grow its retail lending business, which currently accounts for 14 percent of earning assets. This consumer portfolio has P14 billion in assets, doubling from P7 billion to P8 billion two years ago. In the immediate term, Co said AUB could expect the share of retail lending to surge to 30 percent.
To date, he said AUB had yet to roll out its credit card business aggressively, noting this was a difficult business given cutthroat competition. He noted that other banks were giving much higher credit limits than what AUB was willing to offer.
On the consumer business, AUB also offers mortgage and car financing.
The bank’s total loan portfolio is around P100 billion, of which corporate loans account for 86 percent.
With the government’s infrastructure spending and program to boost the countryside, Co said growth would improve across the country, reducing poverty levels.
“There’s still a lot of liquidity in the system, so it will be a good year for the banking industry and for your bank in the next three years at least,” Co told shareholders.
Meanwhile, AUB is studying ways to enter bancassurance, or the business of cross-selling insurance products across its branches.
It is in talks with 10 insurance firms, mostly foreign players, for potential partnership but it was not rushing into any deal as it would like to come up with a cost-effective framework to undertake such new business.
“We are practically the last man standing,” Co said. He was referring to the fact that many of the country’s major banks are already operating bancassurance businesses in partnership with insurers.
“We’re just trying to see how to do that without diverting our focus from what we’re doing now,” Co said. —DORIS DUMLAO-ABADILLA