Union Bank hikes loan-loss provisioning

MANILA, Philippines - The Union Bank of the Philippines (Union Bank) has increased provisioning for impairment losses to P860 million, or roughly 127 percent higher than the P380 million in the previous year.

The provisioning for probable loan losses was stocked up even if Union Bank had no exposure to financial institutions, which were adversely affected by the financial crisis this year.

Union Bank chairman and chief executive officer Justo A. Ortiz said the bank was shielded from the global credit shocks due to its resilience and prudence.

“Our strong regard for prudence and risk management, proved our alacrity to tackle the emerging changes in the financial system,” Ortiz said.

Last year, loans and receivables expanded by 68.2 percent, or from P53.94 billion in 2007 to P90.73 billion. This was mainly due to strong expansion of its loan base.

Higher regulatory requirements on increased deposit levels from the Bangko Sentral ng Pilipinas (BSP) doubled to P22.24 billion in 2008.

Meanwhile, total liabilities amounted to P176.88 billion last year as a result of the 51.20 percent increase in deposit liabilities, which grew to P161.42 billion from P106.76 billion in 2007.

Union Bank recorded an increase in demand deposits of P37.98 billion, savings deposits grew to P1.36 billion, and time deposits to P15.33 billion.

Total assets reached P203.9 billion last year while total capital amounted to P27.02 billion.

Meanwhile, return on average equity (ROE) and return on average assets (ROA) were recorded at eight percent and 1.1 percent, respectively.

Capital adequacy ratio (CAR) was reduced to 12.9 percent last year from 16.4 percent a year ago, due to higher risk-weighted assets with the expansion of the its loan and investment securities portfolio and higher risk weights on ROPs (Philippine sovereign debt papers).

Non-performing loans (NPLs) ratio to total loans increased to 7.3 percent from 5.6 percent in 2007 as interbank loans receivables decreased in 2008. NPL cover improved to 85.6 percent in 2008.

Union Bank presently operates 168 branches and 177 on-site and 12 off-site automated teller machines (ATMs). It remains ranked among the top 10 domestic commercial banks in terms of deposits, loans, capital, and assets.     — TPT