UnionBank sees significant loans growth in 2023, Q1 profit up 30%
MANILA -Aboitiz-led banking giant Union Bank of the Philippines said “significant” loans expansion will sustain earnings growth this year as first quarter profits soared by 30 percent.
UnionBank, part of the family’s flagship conglomerate Aboitiz Equity Ventures Inc., ended the first three months of the year with a net income of P3.4 billion. Net revenues during the period also jumped 57 percent to P16.1 billion.
The company’s financial performance was also bolstered by the acquisition of Citi’s domestic consumer business in 2022.
“The investments we made last year have exceeded our expectations,” UnionBank president and CEO Edwin Bautista said in a statement on Tuesday.
Moreover, its newly-launched digital bank, UnionDigital, had turned profitable after being launched in the latter part of 2022.
“Everything is proceeding vey well, particularly for UnionDigital. It already turned profitable two years ahead of schedule,” Bautista said in a separate media briefing on Monday.
He said the banking sector was benefiting from the continued reopening of the economy and the revenge spending trend. This was also easing provisions they needed to set aside for bad credit, he noted.
UnionBank ended the first quarter with a 39 percent increase in net loans and receivables to P490 billion. Total deposits also climbed by 20 percent to nearly P693 billion.
Bautista expects robust growth in loans to continue through 2023.
“We are going to see very significant loan growth this year,” he said during the briefing.
Meanwhile, the lender’s net interest margin in the first quarter rose by 54 basis points to 5.21 percent.
Net interest income grew 43 percent to P11.5 billion. The Citi acquisition contributed 26 percent or P3 billion, according to UnionBank.
Citi will also bolster the company’s full-year revenues in 2023 although Bautista said there would be a leg in terms of the impact on the bottom line.
“The full net income impact will not be realized until next year because there’s still some doubling of the costs. We are still partly riding on the Citi system so we have to pay them for the use of the system until the end of the year,” he explained.
During the first quarter, UnionBank said fees and other income, excluding trading earnings, surged 82 percent to P4.2 billion. Earning assets expanded by 28 percent to about P895 billion.
UnionBank ended the first quarter with total assets of P1.1 trillion, up 30 percent, the statement showed.
“Our retail focus has allowed us to preserve our margins against a backdrop of
continued policy rate hikes. We expect our core income to further improve throughout
the year as we grow our consumer portfolio,” UnionBank chief financial officer Manuel R. Lozano said in the statement.
“Our expenses this year are still elevated due to one-offs, as we are effectively running on two systems to integrate the acquired Cit consumer business into ours. Once we complete the migration this year, we are confident that we will once again generate double digit return on equity,” he added.INQ
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