UNION Bank of the Philippines (UnionBank) on Monday reported netting P9.2 billion last year, down 27.6 percent from 2022's P12.7 billion given continued costs arising from its acquisition of Citi's consumer business in the Philippines.
"Topline revenues posted robust growth driven by a strong consumer business, higher margins, and customer transaction fees," it said in a statement.
UNION Bank of the Philippines"The bank's bottom line, however, was affected by integration costs related to the Citi consumer business acquisition."
Full-year net revenues, however, were 36 percent higher at P71 billion from P52.2 billion previously. This was attributed to "improvements" that were fueled by a strong consumer business, higher margins, and customer transaction fees.
UnionBank President and Chief Executive Officer Edwin Bautista said the company's investments in new businesses were producing "highly promising results."
"The acquired Citi consumer business has consistently surpassed expectations, while UnionDigital attained profitability throughout its first full year of operations," he added.
"We are experiencing early returns on these strategic investments, with leading indicators pointing towards a sustained increase in transactions over time."
Bautista said he was confident that after completing the integration, UnionBank will be "stronger and more profitable."
The bank's net interest margin improved to 5.5 percent last year from 4.8 percent, resulting in a net interest income of P52 billion, up 34 percent year-on-year.
This was attributed to an increase in consumer lending, with consumer loans accounting for 58 percent of the total loan portfolio.
Non-interest income during the year grew by 41 percent to P19 billion and was complemented by a 54-percent rise in fee-based income to P10 billion.
Manuel Lozano, the bank's chief financial officer, said customer growth targets were exceeded and that UnionBank's customer base was now nearly 14 million.
"The strategic shift towards a more predictable, recurring income model has proven successful, reflected in our above-industry net interest margins and fees as a proportion of our balance sheet size," he added.
Front-loaded expenses incurred in the integration of UnionBank's new businesses, however, affected overall profitability.
"In a way, we are temporarily carrying the cost of running on two systems — we are paying Citi a fee to support the business on their platform while we develop and fully transition all ex-Citi retail customers to our own system," Lozano said.
Operating expenses widened by 43 percent to P45 billion due to the full-year impact of the acquisition of Citi consumer business and UnionDigital.
Lozano, however, said he remained optimistic about growth prospects with the acquired businesses.
UnionBank completed the Citi acquisition in August 2022. It plans to drop the Citi brand later this year once the integration is completed.
The bank's shares were up 80 centavos, or 1.85 percent, to P44 on Monday amid a 0.83-percent drop for the benchmark Philippine Stock Exchange index.
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