Union Bank of the Philippines said Monday its first-quarter net income reached P2 billion, down 41 percent from the same period last year on higher expenses related to integration of Citi’s consumer business.
The bank did not provide comparative figure, but based on the bank’s previous financial filing, it booked P3.4 billion net income in the first quarter of 2023.
Topline revenues remain strong, growing 14 percent year-on year on growing proportion of consumer loans, higher net interest margins and transaction fees.
Net interest income grew 17 percent to P13 billion, driven by a 59-basis-point improvement in net interest margins to 5.7 percent.
Non-interest income excluding trading gains went up by 13 percent to P4.7 billion.
The bank’s consumer loans now account for 59 percent of total loan portfolio, nearly three times higher than the industry average.
UnionBank’s operating expenses rose 10 percent to P11 billion, driven by IT-related costs supporting the successful migration of Citi retail accounts into UnionBank systems.
UnionBank said while this temporarily affected its profitability, it was a planned initiative aimed at unlocking long-term benefits and efficiencies.
UnionBan, on March 24, 2024 completed the final phase of the Citi integration, which involved the transfer of millions of customer and transaction records from Citi to UnionBank’s platforms.
This resulted in a significant increase in the bank’s new-to-bank credit card customers, more than doubling last year’s customer acquisition rate.
“Our first-quarter performance is in line with our expectations. We are even ahead in terms of key metrics that matter for sustainable growth, such as number of retail customers, net interest margins, and fees-to-assets,” said UBP chief finance officer Manuel Lozano
“Now that we have successfully completed the Citi migration, we will no longer bear the one-time costs associated with it starting this month. We will now focus our efforts to realizing the full gains from cross-selling to our growing customer base,” Lozano said.
