banks in the Philippines

UnionBank net income up by 30% to P3.4 billion in Q1

Lance Spencer Yu

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UnionBank net income up by 30% to P3.4 billion in Q1
The Aboitiz-led bank is looking to grow its retail banking segment, leaning into its recently acquired credit card business from Citi

MANILA, Philippines – Union Bank of the Philippines (UnionBank) hit P3.4 billion in net income for the first quarter of 2023, up 30% from the same period last year.

The Aboitiz-led bank saw net revenues jump by 57% from Q1 2022, reaching P16.1 billion. Net interest income grew by 43% to P11.5 billion, with strong consumer loan growth in UnionBank, CitySavings, and UnionDigital paving the way.

Proceeds from the Citi consumer business – acquired by UnionBank last year in a blockbuster sale – also contributed P3 billion to the income.

Fees and gains on sale of investment securities rose by P82% to P4.2 billion, propelled by the growth of digital and card-related transactions. Trading income also improved to P407 million, up from a loss of P241 million from the same period last year. 

Overall, net income margins widened to 5.21%, higher by 54 basis points.

“Our retail focus has allowed us to preserve our margins against a backdrop of continued policy rate hikes. We expect our core income to further improve throughout the year as we grow our consumer portfolio,” UnionBank executive vice president and chief financial officer Manuel Lozano said in a press release. 

Alongside the greater revenue, operating expenses also ballooned by 67% to P3 billion from P1.9 billion, with increases in salaries and employee benefits, taxes, depreciation and amortization, and occupancy. Miscellaneous expenses, in particular, soared by 79% to P4.95 billion from P2.77 billion.

“Our expenses this year are still elevated due to one-offs, as we are effectively running on two systems to integrate the acquired Citi consumer business into ours. Once we complete the migration this year, we are confident that we will once again generate double-digit return on equity,” Lozano added. 

UnionBank also posted higher balance sheet numbers, with total assets as of the first quarter hitting P1.1 trillion, up by 30% versus last year’s Q1 levels.

Net loans and receivables grew to P490 billion, showing a 39% increase. Total deposits rose by 20% to P692.9 billion, which reflected “a healthy growth of the cash management and retail banking segments,” according to the bank. 

“UnionDigital is already profitable after less than a year in operation. There is strong momentum in the acquired credit card business from Citi. New-to-bank card customers are at a record level. We are geared up to grow our retail banking business. Our infrastructure is ready for scale. We have sufficient capital coming from the recent stock rights offering to further grow our earning asset base,” UnionBank president and chief executive officer Edwin Bautista said.

UnionBank recently ranked fourth in Forbes’ 2023 list of top banks in the Philippines. –

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Lance Spencer Yu

Lance Spencer Yu is a multimedia reporter who covers the transportation, tourism, infrastructure, finance, agriculture, and corporate sectors, as well as macroeconomic issues.