UnionBank sees P9.2-B 2023 profit

Non-interest income surged by 41 percent to P19 billion due to a 54 percent growth in service fees for bills payments, fund transfers, interchange, and credit card transactions

Union Bank of the Philippines, or UnionBank, posted a net income of P9.2 billion for 2023, driven by double-digit growth in loans and service fees.

Net revenues jumped by 36 percent to P71 billion compared to the 2022 level.

This reflected a 5.5 percent increase in net interest income, driven by a 10 percent growth in loans and receivables amounting to P527 billion.

As a result, consumer loans expanded to 58 percent of the bank’s total loan portfolio. This includes credit cards, mortgage loans, personal or salary loans, and auto loans.

Meanwhile, non-interest income surged by 41 percent to P19 billion due to a 54 percent growth in service fees for bills payments, fund transfers, interchange, and credit card transactions.

Total deposits, on the other hand, were stable at P713 billion.

Due to higher interest-based income than depositor liabilities, the bank continues to be profitable with a resulting improved net interest margin at 5.5 percent from 4.8 percent.

Operating costs, however, jumped by 43 percent to P45 billion due to the ongoing integration of Citi’s individual credit cardholders into UnionBank’s system and funding for UnionDigital Bank, the digital arm of UnionBank.

Costs front-loaded

“Our overall profitability, however, was affected by front-loaded costs incurred in the integration of new businesses. These new businesses were only included as part of the banking group in the second half of 2022,” UnionBank chief financial officer Manuel Lozano said.

It has grown its client base to 14 million following UnionBank’s acquisition and expansion strategies on the two aforementioned businesses.

Total assets as of December 2023 grew by 5 percent to P1.1 trillion.

“The acquired Citi consumer business has consistently surpassed expectations, while UnionDigital attained profitability throughout its first full year of operations,” UnionBank chief executive officer Edwin Bautista said.

“We are experiencing early returns on these strategic investments, with leading indicators pointing towards a sustained increase in transactions over time,” Bautista said.