Citi acquisition hits UnionBank’s 9-mo earnings
MANILA -Union Bank of the Philippines registered a weaker bottom line in the January-September period despite stronger revenues as expenses ballooned following the acquisition of Citi’s consumer business and rollout of its digital-only banking arm.
On Tuesday, the Aboitiz-led bank announced its net income amounted to P8.1 billion in the first three quarters, lower by 19 percent than the P10.09 billion it booked in the same period last year.
Net revenues climbed by 48 percent to P52.8 billion during the period as net interest income grew by 34 percent to P37.3 billion on the back of 18-percent loan portfolio expansion. However, operating expenses dragged the net income after these soared by 63 percent to P33.5 billion as the full-year impact of the Citi consumer business and UnionDigital Bank took effect.
The lender incurred P3.6-billion one-time expenses for the integration of Citi consumer business. Last month, the bank also invested additional P900 million into UnionDigital to support expansion.
“The integration costs increased since we allocated more time and resources to ensure smooth migration of the acquired Citi consumer business. We also spent on marketing and customer engagement programs to capitalize on the growing consumer segment,” UnionBank executive vice president and chief financial officer Manuel Lozano said.
“Our topline revenues remain strong. We are confident that once we complete the integration, we can show above-industry profitability we have been known to deliver,” added Edwin Bautista, the listed bank’s president and CEO.
Article continues after this advertisementTotal assets grew by 8 percent to P1.1 trillion as of end-September. Customer base has reached over 13 million.
Article continues after this advertisementLast week, UnionBank launched a new line of credit cards, including the UnionBank Rewards Card, UnionBank Cash Back Card, UnionBank Miles+ Card and the UnionBank Reserve Card.
UnionBank consumer business head and senior executive vice president Manoj Varma expressed optimism for the bank’s consumer segment as the credit cards, unsecured loans and small business loans were showing 20-percent to 25-percent growth despite the rising interest rates.
The bank also recently secured the certificate of authority to operate as a virtual asset service provider (VASP), which means it will be able to offer mobile cryptocurrency facility. This is the first among local universal banks.
VASP is an entity that facilitates the transfer or exchange of virtual assets, which are digital units that can be traded online and be used for payment or investment purposes.
UnionBank aims to launch this new feature during the last quarter.
