Union Bank of the Philippines, the country’s 9th largest lender by assets, said Monday net income in the first half dropped to P5.07 billion from the P6.41 billion posted in the year-earlier period, hurt mainly by provision for credit losses that nearly doubled from last year.
Total provision for credit losses in the January-June period soared to P8.99 billion from P4.98 billion while other income declined 6.4 percent to P9.81 billion.
UnionBank said total revenue in the January-June period rose 8.3 percent to P37.3 billion due to its expanding consumer business, enhanced net interest margins, and rising transaction fees.
Interest income was up nearly 15 percent to P27.5 billion due to better interest margins. UnionBank’s net interest margin, one of the highest in the industry at 5.7 percent, benefits from a higher proportion of consumer loans, which now make up 59 percent of its total loan portfolio—nearly three times the industry average.
Operating expenses in the first half declined by 2.4 percent year-on-year to P21.6 billion. The successful integration of the Citi consumer business into UnionBank’s systems in March led to a reduction in IT expenses by close to P1.0 billion quarter-on-quarter.
But the improvement was offset by costs related to customer acquisition and revenue growth.
The bank’s customer base has seen significant growth, with new-to-bank customers more than doubling compared to the previous year’s monthly average. UnionBank now boasts over 15 million total customers.
Total assets reached P1.1 trillion, with total loans and receivables netting P514.8 billion, and low-cost current account/savings account deposits standing at P427.8 billion.
“We continue to post strong topline revenues. With the successful integration of the acquired Citi consumer business now complete, our expenses have naturally declined. Consequently, our net income for the second quarter reached P3.1 billion, up more than 50 percent from the P2.0 billion recorded in the previous quarter. Our focus on the higher-margin consumer segment and the continued expansion of our customer base positions us well to sustain this growth momentum in the coming years,” said Manuel Lozano, chief financial officer of UnionBank.
