Union Bank’s net income hit record high in 2011

MANILA, Philippines—Aboitiz-led Union Bank of the Philippines grew its net profit by 23.2 percent in 2011 to mark its best bottom-line record in history as hefty trading gains complemented interest earnings.

In an unaudited financial statement submitted to the Securities and Exchange Commission, Union Bank reported that it had chalked up an all-time high net profit of P6.59 billion last year, exceeding its previous record-high annual net profit of P5.35 billion posted in 2010.

This translated to an earnings per share of P10.28 attributable to equity holders of parent, up from P8.35 a year ago.

Net interest income dipped by 1 percent to P6.98 billion from a year ago, even as its loan book expanded by a double-digit level as margins narrowed, in turn due to low yields and stiffer competition.

On the other hand, the bank’s trading gains surged by 89.4 percent to P5.4 billion. Other income from service charges, fees and commissions also went up by nearly a quarter to P846.58 million from a year ago.

Union Bank expanded its net loans and receivables by 10.7 percent to P105.21 billion and has further leeway to expand its lending activities as only P0.52 out of every peso of deposit liabilities are being lent out. The bank has been significantly growing its consumer businesses through auto, mortgage and credit card lending.

It ended last year with a deposit base of P204.21 billion, up by 6 percent from a year ago.

On the expenditure side, the bank tripled its impairment losses last year to P1.55 billion from only P524 million a year ago. Early in the year, the bank stated its intention to put up more buffers for potential loan losses to prepare itself from headwinds from the economic woes of the US and Europe.

Meanwhile, spending outside of interest expenditures grew to P8.18 billion from P6.45 billion partly due to higher salaries and employee benefits and miscellaneous expenses.

Capital funds last year increased to P42.72 billion from P35.98 billion a year ago. It also grew its balance sheet by 7 percent to end-2011 with P270.18 billion in total resources.

Union Bank is the country’s eighth-largest bank in resources based on the latest ranking of the Bangko Sentral ng Pilipinas.

As of Friday’s close, Union Bank had a market capitalization of P46.53 billion based on its last traded price of P73.05 per share. Its shares are now trading at a 52-week high in the local stock market.