High costs of migrating the Citi brand into Union Bank of the Philippines’ systems pulled down the first-quarter earnings of the Aboitiz-led lender by 41 percent to P2 billion from P3.4 billion.
In a stock exchange filing on Monday, UnionBank said it recorded a one-time integration cost of P1.1 billion during the January to March period due to the integration of acquired Citi retail accounts.
As a result, UnionBank’s operating expenses rose by 10 percent to P11 billion.
“While this temporarily affected our profitability, it was a planned initiative aimed at unlocking long-term benefits and efficiencies,” the bank said in its disclosure.
“Now that we have successfully completed the Citi migration, we will no longer bear the one-time costs associated with it starting [April]. We will now focus our efforts to realizing the full gains from cross-selling to our growing customer base,” Manuel Lozano, chief financial officer, added.
UnionBank officially dropped the Citi brand on March 24, sealing the P72-billion deal.
This involved the transfer of around 1.5 million of customer and transaction records from Citi to UnionBank’s platforms.
Meanwhile, its top line jumped by 14 percent on growth of consumer loans and higher net interest margins and transaction fees.
Net interest income ended at P13 billion, up by 17 percent as its net interest margins improved by 59 basis points.
Consumer loans accounted for 59 percent of the bank’s total loan portfolio. This is nearly thrice the industry average, according to UnionBank.
Noninterest income, meanwhile, leaped by 13 percent to P4.7 billion.
UnionBank is set to raise up to P10 billion via stock rights offering this year to infuse funds into its digital arm.
UnionBank president and CEO Edwin Bautista earlier said they would make sure to replicate Citi’s features to accommodate the needs of the latter’s former clients.
Bautista said former Citi cardholders are also going to experience new products and features, including payments via InstaPay.He said that when clients cash in rewards, these would also be credited in real time.
UnionBank is also working on intensifying marketing activities to ensure that customers stay with them.As of December last year, data from the Bangko Sentral ng Pilipinas showed that UnionBank was the country’s ninth largest bank with P990.18 billion in assets.
Last year, the bank injected P900 million in fresh capital to UnionDigital Bank to fund expansion plans and meet the growing demand for online services. INQ