Aboitiz-led Union Bank of the Philippines saw a 21-percent year-on-year drop in nine-month net profit to P6.4 billion as the bank continued to recalibrate in order to grow its lending and fee-based businesses.
Excluding securities trading, core income grew 42.5-percent year-on-year to P6.1 billion, the bank disclosed to the Philippine Stock Exchange.
Overall, the earnings performance of the bank translated to a return on equity (ROE) and return on assets (ROA) of 12.2 percent and 1.6 percent, respectively.
The disclosure said Union Bank also continued to be one of the most cost-effective banks in the industry with cost-to-income ratio of 52.7 percent.
Union Bank grew its total loan book by 20.2 percent year-on-year to P265.9 billion, propelling assets to a total of P549.4 billion at end-September.
Total deposits also posted a 20.2-percent year-on-year increase to P437.5 billion.
On track
“We are on track toward achieving our focus 2020 objective of becoming a great retail bank. We continue to be among the most profitable banks in the industry even with the absence of trading, as reflected in our ROE and ROA. More importantly, more than half of our revenues are now coming from the retail segment, which underscores that customer businesses have successfully replaced our trading income of the past,” said Edwin Bautista, Union Bank president and incoming CEO.
In a recent interview, Bautista said that in the last two years, the bank had been growing its loan book by 32 percent. To sustain the transformation, he said a growth of 20 percent should be sustained.
From a customer standpoint, Bautista said around 65 percent of income was now coming from retail clients and individuals, albeit this accounted for only 36 percent in terms of volume.
“Our goal is to be a great retail bank … We want customer income coming from retail, defined as individuals and SMEs (small and medium enterprises),” Bautista said.
With City Savings Bank having been consolidated into its books, Union Bank built a consumer lending portfolio in line with its thrust to cut reliance on securities trading gains.
The aspiration is to maintain a loan book with one-third each equally devoted to consumer, corporate and SMEs. —DORIS DUMLAO-ABADILLA