Union Bank target still in sight

The Union Bank of the Philippines (Union Bank) is still on track to achieve full year net income target.

From a not-too-impressive P2.28 billion last year, top officials of Union Bank expect net earnings to grow by roughly 20 percent to P2.73 billion. Full year income target for 2004 was originally set at P2.4 billion.

In 2003, net earnings reached an impressive P2.15 billion mainly buoyed by strong treasury gains.

"We are on track to grow by 15 to 20 percent this year," Justo Ortiz, chairman and chief executive officer of Union Bank said during the formal launching of its alliance with three major information technology (IT) providers yesterday.

First three months net income reached P790 million, or 58 percent better than the P500 million recorded in the same period in 2004. That despite having to set aside P90 million for provisioning for probable loan losses.

Improved gains in consumer financing, cash management services, capital markets businesses, and asset recovery reportedly accounted for the 30- percent growth in assets reaching P1.6 billion in the first quarter of 2005.

Part of the optimism was buoyed on its average annual growth in deposits of betwen 35 to 40 percent.

The other being its activation of a new electronic system that replaced its antiquated mainframe system. It is cost effective both in the short- and longterm while being flexible and adaptable to all the banking needs of Union Bank’s client base.

"We want to get to know our customers better so we can tailor or customize products to their needs," the bank chairman said.

Bank officials admitted that they favored loosening or lifting of the branch moratorium imposed by the Bangko Sentral ng Pilipinas (BSP). That would allow the Aboitiz group expanded commercial bank to open up "a few more branches."

"But having a huge number of branches does not ensure a huge amount of deposits, loans or bank transactions in general," Ortiz said, adding that having a large base of ATM or credit card users is one way of getting beyond the branch limitations.

He added that their medium term target is to bring the 21st century to its expanding jumber of bank customers which includes members of the Government Service and Insurance System (GSIS). Union Bank introduced e-commerce to the government employees recently.

It also launched an electronic cash management service called OneHub.Gov, a facility that houses its eGobyerno initiatives. OneHub.Gov is the first and only web platform that enables corporations to pay obligations with government institutions such as the Bureau of Internal Revenue and the Socail Security System.

Ortiz revealed that they can conveniently reach their 2010 target if they adopt all the technological advantages offered to the banking system.

"That is the anchor to our 2010 vision," he added. – Ted Torres