UnionBank profit surges 79% in Q1

MANILA, Philippines — Earnings of Union Bank of the Philippines surged by 79 percent to P4.73 billion in the first quarter   from P2.64 billion in the same period last year.

UnionBank president and chief executive officer Edwin Bautista said the  bank is pleased with its first quarter results despite headwinds from the ongoing pandemic.

“We are starting 2021 strong,” Bautista told the bank’s stockholders during their virtual meeting on Friday.

Bautista said UnionBank continues to see a big shift in the use of digital channels after the onboarding of more than 470,000 new digital customers in the first quarter  alone.

The number of bank customers using the mobile app of UnionBank stood at 2.4 million as of end-March.

“Digital transactions are averaging six million per month with UnionBank ranking among the top banks in terms of PESONet and InstaPay transactions. This digital shift motivates us to continue enhancing features across our digital platforms,” Bautista said.

The bank recently launched InstaPay 2.0 enabling fund transfers by inputting mobile number or email address. Also, small and medium enterprises could now open their business accounts and perform banking transactions digitally with the launch of the SME Business Banking app.

Jose Emmanuel Hilado, chief finance officer and treasurer at UnionBank, said the bank’s strong financial performance in the first quarter puts it on track to achieve its  2021 targets.

“We’re also starting the year with strong capital ratios, better margins, and improving credit risk. Nonetheless, we shall continue to monitor developments from the recent reinstatement of enhanced community quarantine and modified enhanced community quarantine and adjust our business plans accordingly to achieve our financial targets and protect our balance sheet,” Hilado said.

The strong earnings performance of UnionBank from January to March translated to a return on equity of 18.1 percent.

The bank’s revenues jumped  by 50 percent to P14.3 billion in the first quarter from P9.3 billion in the same quarter last year. Its net interest inched up by six percent to P7.2 billion from P6.8 billion despite muted credit demand.

The higher net revenues provided cushion for UnionBank to book additional loan loss provisions amounting to P2.3 billion from P1.33 billion and helped absorb the one-time impact on deferred tax assets due to the implementation of Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.

UnionBank reported that its non-performing loan (NPL) ratio improved to 4.7 percent from 5.1 percent in December.

Non-interest income amounted to P7.1 billion in the first quarter, 2.6 times the level booked in the same quarter last year driven mainly by trading gains.

The bank’s loan book recorded a 12 percent decline to P344.9 billion due to weak demand for corporate loans, while its deposit base fell by 22 percent to P222.8 billion as low-cost deposits supported funding requirements.

Operating expenses went up by 23.7 percent to P6.25 billion in end- March from P5.05 billion in the same period last year.

The assets of the Aboitiz-led bank remained flat at P747.3 billion as of end- March.