Union Bank of the Philippines reported a strong financial performance in the first half of 2023, with a net income of P6.4 billion, representing a significant 6% increase compared to the same period last year.
Net revenues for the first six months of the year reached P34.4 billion, showing an impressive 60% growth compared to the previous year. Notably, net interest income saw a remarkable 41% increase, reaching P24.0 billion. This growth can be attributed to a 43% expansion in the bank’s loan portfolio, coupled with a better net interest margin, which increased by 60 bps to 5.2%. The bank’s strategic focus on high-yielding consumer loans effectively countered the impact of rising cost of funds, with consumer loans accounting for 55% of the total loans this year, compared to 42% in the previous year.
Fees and other income more than doubled, totaling P10.5 billion, driven primarily by card-related transactions, digital transactions, and the thriving performance of the bank’s key subsidiaries.
Operating expenses increased by 82% to P21.8 billion due to one-time integration costs related to the acquired Citi consumer business and the establishment of UnionDigital. Excluding these planned costs associated with the new business segments, the increase in operating expenses was in line with volume growth.
The bank’s total assets as of June 2023 reached P1.1 trillion, marking a 27% increase from the previous year. Net loans and receivables surged by 43% to P522.2 billion, while total deposits saw a 25% growth, reaching P693.3 billion.
Manuel R. Lozano, Executive Vice President and Chief Financial Officer, emphasized that this year is a period of investment for the bank’s future. While costs may temporarily be elevated due to the ongoing integration of the acquired Citi consumer business, the bank maintains a healthy earning asset base with a well-diversified consumer loan mix. After the completion of the Citi integration, they expect a substantial reduction in operating expenses, aiming to regain their reputation for delivering above-industry Return on Equity (ROE).
Edwin R. Bautista, President and Chief Executive Officer, expressed confidence in the bank’s current momentum. All consumer business engines are running at full speed, with over 12 million customers, and the acquired Citi business contributing around one-third of their income. He highlighted that CitySavings remains a market leader in providing salary loans, and UnionDigital is already profitable and experiencing rapid growth. Bautista expressed his belief that UnionBank is well on track to achieve its goal of becoming the largest and most profitable retail bank in the Philippines by 2025.
