Union Bank of the Philippines said Monday it posted a 17-percent decline in net income to P11.6 billion in 2020 from P14 billion in 2019, as the banking industry suffered from the impact of the COVID-19 pandemic.
UnionBank president and chief executive Edwin Bautista said in a statement despite the drop in profit, he was pleased with the 2020 performance given the challenging environment.
“This was a product of all UnionBankers who continued to push boundaries amidst the crisis. The pandemic became the inflection point that affirmed our digital strategy,” Bautista said.
“As we line up new features in our digital channels and Tech Up especially more of our underbanked and unbanked countrymen, we aim to ramp up digital customer engagement to sustain our momentum in 2021,” Bautista said.
The net income of P11.6 billion in 2020 was achieved despite credit reserves growing by 4.7 times year-on-year or close to P7 billion more than 2019, the bank said. The earnings performance translated into a return on equity of 11.9 percent.
It said the bank’s digital strategy gained more traction in 2020 as the pandemic accelerated the shift of customer behavior towards digital. Customers transacting through digital channels breached 2 million with more than 500,000 new accounts opened via the mobile app.
UBX, the bank’s technology and innovation firm, signed up more than 140,000 micro, small and medium enterprises across platforms i2i, BUX, Sentro and SeekCap.
CitySavings Bank, the thrift banking unit, also continued to deliver efficient services to teachers and motorcycle loan borrowers with the help of mobile sales app.
The growth in customers and digital transactions resulted in strong operating income for the year. Revenues reached an all-time high of P42.1 billion, driven by the expansion of net interest income by 29 percent to P28.7 billion.
Net interest income growth was attributed to higher margins, which increased by 76 basis points to 4.7 percent because of robust CASA (current and savings account) growth, reduced funding cost given the
low interest rate environment and the shift to high-yielding loans (such as consumer, SME, and commercial) as demand for corporate loans declined.
Strong trading gains amounting to P8.9 billion boosted topline revenues. Growth in operating expenses was kept at a single-digit despite robust business growth due to efficiencies from digitization.
Credit cost booked by the bank was at P8.7 billion in 2020, against the P1.9 billion in the prior year as non-performing loans increased from 3.1 percent to 5.1 percent.
Jose Emmanuel Hilado, chief financial officer and treasurer, said UnionBank entered 2021 cautiously optimistic with a strong focus on balance sheet management and credit underwriting.
“We expect to sustain customer revenue growth as we continue to achieve operating efficiencies,” Hilado said.
The bank said that as of end-December 2020, total assets reached P774.5 billion. The strong earnings performance translated into above regulatory capital requirements, with CET1 Ratio at 15 percent and capital adequacy ratio at 17 percent.