UnionBank bottom line drops by 28.5% in Q1 on tax-related costs

Aboitiz-led Union Bank of the Philippines is still looking forward to a good year despite the drop in first-quarter income. INQUIRER FILE PHOTO

MANILA, Philippines – Despite a weak first quarter, Union Bank of the Philippines is expecting to improve its profitability this year amid expectations that the central bank will continue easing its monetary policy.

The Aboitiz-led bank said in a regulatory filing on Monday its bottom line in the January to March period tumbled by 28.5 percent to P1.4 billion due to one-time, tax-related costs.

Meanwhile, revenues grew by 8.4 percent to P19.4 billion.

READ: UnionBank delivered P12-B net income in 2024

“If we normalize for the impact of one-offs, our net income would be comparable to prior quarters,” UnionBank chief financial officer, Manuel Lozano, said in their disclosure. “Moving forward, we expect performance to get back to this trajectory and we remain confident that we will exceed our 2024 performance.”

UnionBank’s optimism for the rest of the year comes amid the Bangko Sentral ng Pilipinas’ (BSP) monetary policy easing cycle. So far, the BSP has cut the benchmark rate for overnight borrowing by 25 basis points this year to 5.5 percent, although it has hinted at further easing during its next rate-setting meeting in June.

Rate cuts typically result in higher demand for loans due to lower borrowing costs for clients.

Net interest income improved by 14.4 percent to P15.4 billion as UnionBank grew its consumer lending portfolio, with credit cards, personal loans and teachers’ loans growing the fastest.

Consumer loans currently account for 62 percent of UnionBank’s total loan portfolio.

Fee-based income also jumped by 21.3 percent to P3.7 billion as a result of the migration of Citi-branded consumer accounts. This led to a higher number of transactions, according to UnionBank.

Last year, UnionBank completed its acquisition of Citi’s consumer business, which involved the transfer of around 1.5 million customer and transaction records.

UnionBank president Ana Maria Aboitiz Delgado, who started her term in January, told reporters on Monday that they focused on addressing “customer service challenges,” especially during the beginning of the transition.

“We really spent time in the months following the migration to invest in capacity to be able to handle the calls that were coming in,” Delgado said during a virtual media briefing, noting that they had no issues in terms of product features.

“We will continue to enhance the customer experience and bring new features not just for those [who] came from Citi, but for all our customers. We have a couple of new things that we will bring to you,” she added. INQ