Union Bank of the Philippines on Monday reported net profit of P2 billion in the first, a sharp drop from the P3.4 billion the lender posted in the same period last year.
UnionBank said the allocation of resources towards the migration of the acquired Citi Consumer business into UnionBank systems “temporarily affected our profitability.” It said that the spending “was a planned initiative aimed at unlocking long-term benefits and efficiencies.”
A one-time integration cost of P1.1 billion was incurred in the first quarter of 2024
It said revenue remained strong having grown 14 percent year-on-year.
This was attributed to the bank’s growing proportion of consumer loans, higher net interest margins, and transaction fees. Net interest income grew by 17 percent to P13 billion driven by a 59-basis point improvement in net interest margins now standing at 5.7 percent.
Consumer loans accounted for 59 percent of total loan portfolio, nearly 3 times higher than industry average.
On 24 March 2024, the bank successfully 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.
UnionBank said operating expenses rose by 10 percent to P11 billion, driven by IT-related costs supporting the successful migration of Citi retail accounts into UnionBank systems. It added that marketing investments resulted in a significant increase in new-to-bank credit card customers; more than doubling last year’s customer acquisition rate.
Total assets as of end March stood at P1.1 trillion while total loans reached P521 billion
“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. 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,” said Manuel Lozano, UnionBank’s chief financial officer.
