Loan loss provisions pull down 2020 UnionBank profit to P11.6B

Aboitiz-led UnionBank of the Philippines posted P11.6 billion in net profit last year, 17 percent down from the same period last year, as the bank jacked up provisions for probable loan losses amid the challenging economic condition brought about by the coronavirus pandemic.

Credit impairment losses amounted to P8.7 billion for the full year compared to only P1.86 billion in 2019, the bank disclosed to the Philippine Stock Exchange. Meanwhile, the ratio of bad loans increased to 5.1 percent of total loans from 3.1 percent in the previous year.

Earnings performance for the year translated to a return on equity of 11.9 percent.

“I am pleased with the bank’s 2020 performance despite a challenging year. This was a product of all UnionBankers who continued to push boundaries amidst the crisis. The pandemic became the inflection point that affirmed our digital strategy… we aim to ramp up digital customer engagement to sustain our momentum in 2021,” said Edwin Bautista, UnionBank president and chief executive officer.

“We enter 2021 cautiously optimistic with a strong focus on balance sheet management and credit underwriting. We expect to sustain customer revenue growth as we continue to achieve operating efficiencies,” said Jose Emmanuel Hilado, UnionBank chief financial officer and treasurer.

The bank’s digital strategy gained more traction in 2020 as lockdown measures prompted by COVID-19 accelerated the shift of customer behavior towards digital channels. Customers transacting through digital channels breached two million with more than 500,000 new accounts opened via the mobile app. UBX, the Bank’s technology and innovation firm, signed up more than 140,000 micro, small and medium enterprises across its platforms namely blockchain banking platform i2i, payments and logistics solution BUX, online store-builder Sentro, and business loan platform SeekCap.

Thrift bank arm CitySavings Bank also served teachers and motorcycle loan borrowers with the help of its mobile sales app. —Doris Dumlao-Abadilla INQ