The Market Monitor Minding the Nation's Business
Union Bank of the Philippines (UnionBank) is focusing on its core lending business to drive profit, which, in the first four months, grew by 28.1 percent.
At its annual stockholders’ meeting, UnionBank reported a P2.4-billion profit in the first four months, compared with P1.9 billion in the same period last year.
The growth in net income was driven mainly by the 34.6-percent growth in net interest income and 12.1-percent growth in servicing fees.
Customer loan growth was sustained, increasing by 26.5 percent, year-on-year, to P193.8 billion.
Low-cost current account and saving account (CASA) deposits grew 17.5 percent, year-on-year.
As of April, the bank’s annualized return on equity (ROE) and return on assets (ROA) are at 12.1 percent and 1.6 percent respectively.
The increase in the bank’s core businesses was anchored on its wholesale customer acquisition strategy, which leverages on corporate relationships and institutional partnerships.
The bank has always been at the forefront of innovation in order to support the continuously evolving customer expectations.
Digital transformation for UnionBank would mean the ability to provide customers with 24/7 banking operations, six-sigma reliability and straight-through processing of transactions.
“With the ultimate objective of customer centricity, providing our brand of unique customer experience, our mandate is to transform into a digital bank in order to adapt to these shifts in customer behavior,” UnionBank President Edwin Bautista said.
He also said the bank’s new business approach improved its loans to deposit ratio, which was previously the lowest in the industry.
UnionBank also used to have one of the highest securities portfolio in the industry.
Bautista is optimistic about their loan portfolio and targets to sustain growth for the rest of the year.
“Right now, we’re comfortable with the growth that we’re experiencing. We’ll probably be getting growth levels like what we’re experiencing right now,” he said as he declined to give specific numbers.
Microfinance is also a product that the bank is looking at.
UnionBank Senior Executive Vice President Eugene Acevedo, concurrently the head of the bank’s retail banking and corporate banking and the chairman of UnionBank unit CitySavings Bank, said the additional CitySavings Bank branches they opened recently in Mindanao would help them further grow the loan portfolio.
Another prospective growth driver was microfinance, which the bank expected to launch in the Visayas and Mindanao within the year, he said.
Meanwhile, Baustista discounted any capital-raising plan to fund the bank’s loan portfolio, saying that its capital base remains enough to address loan demand and that its subsidiaries are also helping fund loan demand.
“As we move toward digitalization, we are cognizant about the risks and we have upped our systems. We have moved our preparedness several notches higher,” he said.
Bautista said the bank’s system had been reevaluated and the assessment did not only focus on rules regarding the anti-money laundering act (AMLC) but the overall cyber security.
He also noted that UnionBank has unique system on who manages a branch, with the branch manager tasked to head the bank’s operations and the relationship manager for customer relations.
These officials did not have overlapping tasks, he said.
RIZA LOZADA