Union Bank of the Philippines, the eighth-largest lender in terms of assets, said net income in the first quarter rose 22 percent year-on-year to P2.6 billion, on the strength of its core businesses.
The bank said in a disclosure to the stock exchange Monday revenues increased 37 percent to P9.5 billion, fueled by net interest income, which grew 47 percent on year to P6.8 billion.
Customer loans climbed 24 percent to P391.8 billion due to the expansion of commercial lending ( up 35 percent), consumer loans (31 percent) and SME banking (25 percent).
Margins rose by 114 basis points to 4.5 percent from 3.4 percent in the previous year, driven by lower funding costs resulting from the expansion of current and savings account deposits (22 percent), as well as from Bangko Sentral ng Pilipinas’ cuts in policy rate and reserve requirement ratio.
UnionBank allotted higher provisions in the first quarter of the year in anticipation of the potential impact of the COVID-19 pandemic on the bank’s credit portfolio.
It raised the provision for loan losses by 750 percent to P1.3 billion from just P174.6 million in the previous year.
“We deemed it prudent to set aside higher provisions for the year given the uncertainties brought about by this unprecedented health crisis,” Jose Emmanuel Hilado, UnionBank chief financial officer and treasurer, said.
“Our solid financial performance and capital base shall provide us the cushion to withstand the economic impact of the enhanced community quarantine,” Hilado said.
UnionBank president and chief executive Edwin Bautista said the bank was committed to support the economy and its customers by ensuring access to liquidity and other financial needs amid this crisis.
Bautista said branches remained open to the public and the bank’s digital channels were highly accessible.
“We encourage everyone to safely Bank from Home and take advantage of the features of our UnionBank Online app such as digital account opening, online check deposits, fund transfers, and remittance to partner outlets, including remittance centers nationwide,” Bautista said.
“I am deeply thankful to all UnionBank frontliners and employees operating the bank from their homes, who ensure that we deliver full banking services to our customers during this unprecedented pandemic,” Bautista said.
UnionBank’s net income in 2019 hit an all-time high of P14 billion, or more than double its earnings posted in the previous year. This translated into an above-industry return on equity of 16.3 percent and return on assets of 2 percent.