UnionBank 9-month earnings down on lower trading income

Earnings at Aboitiz-led Union Bank of the Philippines were weighed down by the trading business in the first three quarters of 2022 while other core banking segments rose, pushing up assets past the P1-trillion mark.

Net income from January to September dropped 5.6 percent to P10.1 billion but was up 67 percent to P4 billion in the third quarter, compared to the same quarter last year,  after the lender completed the P72- billion takeover of Citi’s Philippine assets.

Excluding trading income, net revenue in the nine-month period jumped 37 percent to P36 billion while provisions for debt losses fell 43 percent to P2.3 billion.

Net interest margin also increased to 4.9 percent from 4.6 percent due to “the expansion of earning assets” and income from current and savings deposits, or Casa.

Net loans expanded 37 percent to P449 million while Casa (current account savings account) ended with a record 31 percent growth to P417 billion, UnionBank added. Fee-based income expanded 64 percent to P5.1 billion.

By the end of September, the lender had total assets of P1.05 trillion, up 37 percent from the previous year.

UnionBank president and CEO Edwin Bautista said the results validated the company’s strategy to expand its retail business.

“Our consumer loans now account for 52 percent of our total loan book, which is more than double the industry average. Our retail customer base has doubled in the past three years mainly coming from our digital account opening and cash management ecosystems,” he said.

“We are seeing strong momentum in terms of new-to-bank customer acquisition. All these milestones have set us up for continued strong growth in the retail market,” Bautista added.

A key piece in the company’s expansion was the acquisition of Citi Philippines’ consumer business, which was completed last August.

“We have successfully closed the acquisition of the Citi consumer business and became the legal owner of the portfolio last August 1, 2022. The transaction added P98 billion of total assets to the bank, including P65 billion in net loans and P30 billion in cash,” UnionBank chief finance officer Emmanuel U. Hilado said in a statement.

“It also included P67 billion in deposits with a Casa ratio of 89 percent. We are confident that the integration would be seamless as 1,500 former Citi employees, including 100 percent of the senior management of the consumer business, have joined UnionBank,” he added.

The deal also made UnionBank among the top three credit cards issuers in the country in terms of usage and spending.

The lender is part of Aboitiz Equity Ventures, the Aboitiz clan’s flagship conglomerate whose interest span power, finance, food, property and infrastructure.

Earlier this year, UnionBank raised P40 billion from a stock rights offer to partly finance the Citi deal. Last June, it raised P11 billion through a pioneering “digital peso” bond sale that was well received by investors.

In a stock exchange filing on Wednesday, UnionBank said its board approved a maximum P20 billion fundraising plan though another rights offer, a private placement or a combination of both. No further details were disclosed.