Higher costs gnaw on Union Bank profit
Higher operating costs continued to drag the bottom line of Aboitiz-led Union Bank of the Philippines, with its earnings in the January to September period dropping by 24 percent.
In a disclosure to the local bourse on Monday, the lender said its earnings in the first nine months had declined to P6.5 billion from the P8.56-billion profit posted a year ago.
The company’s quarter-on-quarter performance, on the other hand, witnessed a solid result, with net income surging by 77 percent to P3.2 billion in the July to September period.
Its net revenues during the nine-month period, meanwhile, grew 7.2 percent to P60.5 billion, mainly fueled by its consumer business.
Unsecured consumer loans increased 16 percent to P138.5 billion, an improvement the firm owed to its “targeted digital marketing campaigns and portfolio actions.”
Net interest income likewise jumped 11.6 percent to P47.5 billion from P42.6 billion.
However, the group’s operating expenses went up by 7 percent to P35.5 billion from P33 billion in the same period a year ago.
But UnionBank, now led by its new CEO Ana Maria Aboitiz-Delgado, said the investments were necessary to pump up its customer service game, as the funds had gone to boosting client acquisition, service delivery, client engagement and operational efficiency.
The bank said these were “key pillars in the expansion of both consumer and institutional banking franchises.”
“The bank will continue to build on the progress made in strengthening operational resiliency and reinforcing the balance sheet,” UnionBank chief financial officer Manuel Lozano said.
“Credit costs have stabilized while portfolio quality continues to improve. Combined with strong top-line momentum, these developments position UnionBank for a positive growth trajectory in the future,” the executive added.
In June, UnionBank raised P16 billion from the domestic debt market to finance its expansion plans.
