AUB expects 50% profit hike

MANILA, Philippines - Medium-sized commercial bank Asia United Bank (AUB) expects its net earnings to grow at least 50 percent this year, a top bank official said.

In the first four months of 2010, AUB reported a net income of P414 million, almost doubled from the profit level in the same period last year.

AUB senior vice president Rojo D. Fernandez said they are optimistic a 50-percent growth in net earnings for 2010 is highly possible. “Our four-month performance is strong evidence,” he said yesterday.

Like most banks, trading gains was a notable contributor to the bottom line due to a stronger capital markets.

AUB also plans to expand its consumer loan portfolio in the next five years. At present, consumer lending only amounted to a little over P1 billion last year from a loan portfolio of P14.8 billion.

The bank’s consumer loans consist basically of salary and personal loans. But Fernandez said they will soon be introducing auto and mortgage loans.

“We will definitely push that business,” Fernandez said, adding that the bulk of its lending serves its 8,000 corporate accounts, including the small and medium enterprises. They are targeting consumer lending to account for a third of the bank’s total loan portfolio within five years.

To complement the development of the consumer banking sector, AUB intends to expand its reach. It operates 54 branches nationwide and it has 11 more to open within the year.

Fernandez said the bank does not harbor illusions of competing head-on with the five leading domestic commercial banks. “A maximum nationwide branch network of 150 is sufficient in our line of business.”

Meanwhile, AUB said it has no plans of raising capital to fulfill any regulatory requirement, mainly related to the implementation of Basel 2 and Basel 3, next year. The bank has a capital base of P7.8 billion. At the end of March this year, it reflected a capital adequacy ratio (CAR) of 20.39 percent. The Bangko Sentral ng Pilipinas (BSP) has set a minimum 10-percent CAR while the Bank for International Settlement (BIS) requires a minimum eight percent.