UnionBank income slips 17% to P11.6 B

The net income of Aboitiz-led Union Bank of the Philippines declined by more than 17 percent to P11.6 billion last year from a record P14 billion in 2019 on the back of an almost a five-fold jump in provisioning for probable loan losses due to the impact of the pandemic.

The bank’s allowance for soured loans amounted to P8.7 billion last year, 4.7 times the P1.9 billion recorded in 2019.

UnionBank’s non-performing loan (NPL) ratio increased to 5.1 percent from 3.1 percent due to the impact of the pandemic on the borrowers’ capacity to pay their financial obligations.

UnionBank president and chief executive officer Edwin Bautista said he was pleased with the bank’s 2020 performance despite a challenging year.

“This was a product of all UnionBankers who continued to push boundaries amid the crisis. The pandemic became the inflection point that affirmed our digital strategy,” Bautista said.

The bank’s digital strategy gained more traction in 2020 as COVID-19 accelerated the shift of customer behavior toward digital.

Customers transactions through digital channels breached two million with more than 500,000 new accounts opened via the mobile app.

UBX, the Union Bank’s technology and innovation firm, signed up more than 140,000 micro, small and medium enterprises (MSMEs) across its platforms namely i2i, BUX, Sentro, and SeekCap.

On the other hand, CitySavings Bank also continued to deliver efficient services to teachers and motorcycle loan borrowers with the help of its mobile sales app.

“As we line up new features in our digital channels and Tech Up especially more of our underbanked and unbanked countrymen, we aim to ramp up digital customer engagement to sustain our momentum in 2021,” Bautista said.

The Aboitiz-led bank noted the growth in customers and digital transactions resulted in strong operating income for the year.

Revenues were at an all-time high of P42.1 billion as net interest income surged by 29 percent to P28.7 billion.

The sharp rise in net interest income was attributed to higher margins which went up by 76 basis points to 4.7 percent on robust deposit growth, reduced funding cost given the low interest rate environment and the shift to highyielding loans such as consumer, small and medium enterprises (SMEs), and commercial.