Union Bank sees net profit growing 10-15% this year

Aboitiz-led Union Bank of the Philippines aims to grow its net profit by 10-15 percent this year from the record-high bottom line last year alongside efforts to expand the company’s lending activities.

UnionBank president Victor Valdepeñas said the bank’s consumer group was working to grow that segment by 30 percent to help sustain a 15-percent growth in the loan book every year. The bank has been expanding its consumer businesses through auto, mortgage and credit card lending.

Valdepeñas added that the goal would be to top last year’s record-high profit of P6.6 billion. “We think we can still grow over that by the usual 10-15 percent double-digit growth,” he said.

“What we want to do is to make sure that earnings growth is coming from other businesses like customer franchises, retail banking, corporate and middle market (lending), including transaction banking, cash management and other services,” Valdepeñas said.

One big challenge for the bank this year, the banker said, would be to sustain a momentum of growth that would come from a diversified base.

Despite its relatively small loan book, treasury earnings contribute significantly to Union Bank’s profit every year. Other bankers attributed this to Valdepeñas’ skill in making treasury earnings from proprietary recurring. But moving forward, Valdepeñas said the bank would propel growth from other core sources.

In 2011, 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 52 centavos out of every peso of deposit liabilities were being lent out.

The low-interest rate environment arising from the cash-awash financial system, Valdepeñas said, would be a big challenge for everybody because this was depressing asset yields.

“Of course we’ve got to take our cue from the central bank in terms of their monetary policy targets,” he said.

Stiffer competition in the banking industry, Valdepeñas said, would only be a natural thing. “It’s just that we want to make sure that our products are superior and innovative so we’ll get a fair share of the market.”

Union Bank is the country’s eighth-biggest in resources based on the latest ranking of the Bangko Sentral ng Pilipinas. It ended 2011 with P270.18 billion in assets.