UCPB earnings flat in first half of 2018

MANILA, Philippines — United Coconut Planters Bank (UCPB) expects higher margins arising from higher interest rates to boost its profit in the second half after booking flat earnings growth in the first half of the year.

UCPB president and CEO Higinio Macadaeg said the bank’s revenues would pick up in the second semester on the back of higher loan rates.

“We see margins improving in the next semester as we align loan rates with the increased deposit rates which should boost revenues from our lending business. Consumer banking and bancassurance will be our main revenue drivers for the rest of the year,” Macadaeg said.

The Bangko Sentral ng Pilipinas (BSP) has so far raised interest rates by 100 basis points this year to curb rising inflationary pressures. The central bank’s Monetary Board lifted rates by 25 basis points for the first time in more than three years last May 10 followed by another 25 basis points last June 20 and 50 basis points last Aug. 9.

UCPB recorded a net income of P2 billion in the first six months of the year, same as the previous year’s level, amid the industry’s highly challenging operating environment brought about by the rise in the cost of funds that tightened margins and limited trading opportunities.

Revenues climbed eight percent to P8.67 billion from P8.01 billion, reflecting higher interest and non-interest income.

Interest income rose nine percent to P7.45 billion from P6.83 billion amid the double-digit 10 percent growth in loan book to P174.09 billion from P158.9 billion.

“The increase was driven by the continued strong demand for consumer loans, primarily from the real estate segment,” the bank said.

Despite lower income from fixed income securities, non-interest income inched up three percent to P1.22 billion from P1.18 billion due to higher fees, mainly from bancassurance coupled with higher foreign exchange gain.

UCPB said the growth in operating income in the first half was tempered by the bank’s conservative move to increase its loan loss provisions given its rising loan portfolio as well as the lower income from subsidiaries.

The universal bank booked a 22 percent jump in net income last year to a record P4.08 billion as it continues to aggressively expand its loan portfolio and deposit base.