MANILA -Aboitiz-led Union Bank of the Philippines said profits were modestly higher during the first semester of 2023 as costs weighed on its bottom line amid the acquisition of Citi’s Philippine consumer business the previous year.
The banking giant’s net income from January to June rose 6 percent while net revenue surged by 60 percent to P34.4 billion. The bulk of the amount came from net interest earnings of P24 billion, up 41 percent.
UnionBank, however, also pointed to an 82-percent increase in operating expenses to nearly P22 billion due to “one-time” integration costs related to the takeover of Citi’s assets. The lender earlier said it would complete the integration and migration of Citi within the year.
“We consider this year as a period of investing for our future,” UnionBank chief financial Manuel Lozano said in a statement on Monday.
“Our costs will temporarily be elevated this year, while the integration of the acquired Citi consumer business is ongoing,” he added.
The bank executive said their business prospects remain strong with “all segments are growing in double digits”.
“As soon as we complete the Citi integration, we expect a substantial reduction in operating expenses that will bring us back to above-industry [return on equity] we have been known to deliver,” he said.
In the statement, UnionBank said margins during the period increased while its proportion of consumer loans to total loans improved to 55 percent this year versus 42 percent last year. Net loans and receivables soared 43 percent to P522.2 billion during the first semester.
Fees and other income also doubled to P10.5 billion, mainly due to card-related transactions and digital transactions. UnionBank ended the first semester with total assts of P1.1 trillion, up 27 percent, while total deposits grew 25 percent to nearly P700 billion.
“All our consumer business-engines are running in full speed. We now have over 12 million customers. The acquired Citi business is contributing around one-third of our income today. CitySavings continues to be a market leader in providing salary loans,” UnionBank CEO Edwin R. Bautista said in the same statement.
“UnionDigital is already profitable and growing fast. This kind of momentum gives me confidence that UnionBank will achieve its goal of becoming the largest and most profitable retail bank in the Philippines by 2025,” he added.