UnionBank profit up 9% to P12.6 billion in 2021

MANILA, Philippines — Earnings of Union Bank of the Philippines went up by nine percent to P12.6 billion in 2021, from P11.6 billion in 2020, on the back of the sharp drop in provisioning for soured loans.

Jose Emmanuel Hilado, chief financial officer and treasurer at UnionBank, said last year’s performance gives the bank a good foundation for further growth this year.

“We expect a healthy expansion in our loan portfolio, steady margins from strong CASA (current account savings account) growth, improving credit quality, and higher revenues across our business groups this year,” he said.

In a disclosure to the Philippine Stock Exchange, the bank said its earnings performance in 2021 translated to above-industry return on equity of 12 percent, slightly higher than the 11.9 percent growth recorded in 2020.

The Aboitiz-led bank reported a seven percent increase in revenues to an all-time high of P45.1 billion in 2021 from P42.1 billion a year earlier.

The bank’s net interest income rose by four percent to P29.8 billion as net interest margins increased by nine basis points to 4.6 percent, supported by lower funding costs.

On the other hand, UnionBank posted a 14 percent growth in net interest income to P15.3 billion, driven by higher fees, service charges, trading income and foreign exchange gains.

According to UnionBank, allocation for potential credit losses plunged by 31 percent to P5.8 billion last year from P8.7 billion in 2020 as credit risk brought about by the pandemic stabilized.

The publicly held bank also reported an improved non-performing loan (NPL) ratio of five percent in 2021 after rising to 5.1 percent in 2020 from 3.1 percent before the global health crisis in 2019.

The loan book of UnionBank went up by six percent to P359.8 billion, while its deposit base zoomed 32 percent to P341 billion.

This translated to a seven percent increase in the bank’s total resources to P831.1 billion last year from the previous year’s P774.5 billion.

UnionBank president and CEO Edwin Bautista said the bank’s performance last year was a validation of its digital transformation strategy.

The bank’s customer accounts grew by 2.5 million, with close to one million coming from digital-only account opening.

“We hit key strategic milestones that ramped up our growth aspirations. CASA growth was at an all-time high for the second consecutive year, owing to our cash management solutions,” Bautista said.

UnionBank’s UBX, Bautista said, hit an inflection point with its e-commerce platforms, with transactions breaching the one million-mark in December alone.

Likewise, digital banking unit UnionDigital is also on track for commercial launch by the middle of 2022.

UnionBank has acquired for P55 billion the consumer banking business of global banking giant Citigroup in the Philippines.

“Together with our digital initiatives, our top priority in 2022 is the smooth transition and migration of Citi’s consumer banking business. We are committed to uphold Citi’s superior customer experience and provide a new home for all Citi employees in UnionBank,” Bautista said.