Union Bank still on track for 2010 target

The Union Bank of the Philippines (Union Bank) has to register an average annual net income growth of not lower than 15 percent if it is to join the top three commercial banks in the Philippines.

So far, the bank has been recording an averaging a little over 20 percent in the past five years.

Last year, net income was registered a P2.7 billion from P2.2 billion in 2004, and P2.15 billion the year before. In 2002, net income was recorded at P1.5 billion in 2002 and P1.1 billion in 2001.

In the first three months of this year, net earnings hit P792 million, slightly higher than the P790 million in the same period last year.

Just recently, it practically acquired the International Exchange Bank (i-Bank) which is expected to bring them one step closer to their 2010 target. The deal is expected to be finalized within the next two weeks.

The acquisition will add P60 billion in total resources and 75 branches to UnionBank.

Union Bank president Victor B. Valdepeñas admitted however that another good acquisition, several capital-raising activities, and alliances with bank and non-bank institutions could seal their 2010 target.

"We need franchises, tie-ups, and possible tier 1 or tier 2 capital-raising activities to make it work," Valdepeñas said during its stockholders’ meeting Friday.

Union Bank also took a crack at acquiring the Philippine National Bank (PNB) last year only to lose out from majority stakeholder Lucio Tan.

The bank is still looking for an acquisition rich in the remittance business and a deep deposit base with naturally a significant and adequately spread branch network.

Union Bank chairman Justo A. Ortiz said that another important driver for its 2010 goal is technology.

The 2010 vision means that aside from its annual average growth rate of over 20 percent, it must reach a retial customer base of 1.5 million and 3,000 corporate customers.

It introduced a platform that will allow corporates to pay its taxes to the Bureau of Internal Revenue and the Bureau of Customs. Of course, it had already introduced electronic payments and electronic business platforms for its client base, both individual as well as corporate.

Consumer financing, cash management services, capital markets businesses, and asset recovery, which are among Union Bank’s strength, depend heavily on the electronic environment.

"That is the anchor to our 2010 vision," Ortiz said in his chairman’s report.