UnionBank’s net profit down in first half

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MANILA, Philippines — Profits at the Union Bank of the Philippines, headed by Aboitiz, fell 27% to 6.06 billion pesos in the first half, from 8.31 billion pesos due to extraordinary business gains recorded in the during the same period last year.

Jose Emmanuel Hilado, treasurer and head of global market at UnionBank, said the first-half performance highlights the strength of the listed bank’s core businesses and validates its retail-focused strategy.

“We have also taken important steps towards realizing our aspirations to become the best retail bank in the country,” said Hilado.

Union Digital Bank launched commercial operations, enabling the bank to offer financial services to the underserved consumer segment and took over Citi’s consumer banking business in the Philippines.

In the second quarter alone, the net income of the bank headed by Aboitiz fell 2.5% to 3.5 billion pesos against 3.59 billion pesos in the same quarter last year, but was higher by 32% to the 2.6 billion pesos recorded in the first quarter.

Net revenue, excluding trading revenue, was up 26% year-on-year and 10% quarter-on-quarter.

UnionBank was able to maintain its net interest margin at 4.7% thanks to growth in higher-yielding consumer and commercial loans, coupled with record growth in current and savings accounts (CASA).

Recurring charges jumped 92% to 2.2 billion pesos, thanks to digital transactions.

At the end of June, UnionBank’s total assets stood at 875 billion pesos, up 19% from the same period last year.

The bank’s total loans and receivables increased by 13% to reach 381 billion pesos, while total deposits increased by 12% to reach 555 billion pesos.

“It was a good quarter for the bank. Our net income was driven by recurring net interest income and commissions. Credit costs have also stabilized and operating expenses are well in line with expectations,” Hilado said.

For the rest of the year, Hilado said the bank will focus on protecting margins while dealing with the impact of rising interest rates on its balance sheet.

The Bangko Sentral ng Pilipinas (BSP) has so far raised interest rates by 125 basis points, bringing the benchmark rate to 3.25%, to curb rising inflationary pressures.

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