UnionBank Q3 profit up 11%

Aboitiz-led Union Bank of the Philippines grew its net profit in the third quarter by 11 percent year-on-year to P4.2 billion on higher earnings from core lending and fee-based businesses.

This brought January to September net profit to P8.5 billion, down by 0.9 percent year-on-year due to higher provisions for probable loan losses this challenging year, UnionBank said in a recent disclosure to the Philippine Stock Exchange.

The bank had set aside P7.5 billion in loan loss buffer for the nine-month period, much higher than the P484-million impairment losses booked in the same period last year. Larger provisions were set aside this year due to the weakening of the economy as a result of the coronavirus pandemic.

This earnings performance for the nine-month period translated to a return on equity of 11.6 percent.

“Four years ago, we pursued digital transformation in order to survive the winds of disruption. It was a matter of survival. We took it to heart and embarked on a mission to transform our bank to be competitive in the 4th Industrial Revolution by becoming digital to the core. We may now look like a different bank, but our purpose remains the same: To elevate lives and fulfill dreams, with the goal to cocreate innovations for a better world,” UnionBank president Edwin Bautista said in a statement.

The bank is now deploying the next phase of its digital transformation journey, which includes emerging world-leading technologies such as artificial intelligence, robotic process automation and data science.

For the third quarter alone, the bank’s net interest income rose by 27 percent year-on-year to P7.6 billion, attributed to significant margin improvement.

Fee-based income for the third quarter increased by 18 percent year-on-year to P621.7 million.

Revenue for the nine-month period grew by 33 percent year-on-year to P31.8 billion as net interest income expanded by 36 percent to P21.4 billion. The bank reported continued growth in earning assets and higher margins versus the same period last year.

The bank grew its loan book by 3 percent year-on-year to P355.8 billion during the nine-month period. On the funding side, deposit-taking activities expanded by 29 percent year-on-year to P539.9 billion.

This suggested that for every peso generated by the bank as deposits, it turned about 66 centavos into earning assets through its lending facilities.

As the bank grew its low-cost deposits by 33 percent year-on-year alongside the decline in other funding costs, net interest margin for the nine-month period improved by 92 basis points to 4.6 percent.

Total noninterest income rose by 26 percent to P10.4 billion due to higher trading gains.

As of end-September, UnionBank’s total assets stood at P758.0 billion, 11 percent higher than last year’s level. —Doris Dumlao-Abadilla