Union Bank of the Philippines (UnionBank) ramped up its net income by 37 percent to P2.21 billion in the first quarter, from P1.6 billion as a result of interest payments and operating fees.
UnionBank secured its growth in 2016 through the first quarter with higher loan income of P3.9 billion, or 11 percent. Compared to the previous year, its total loan income grew to P253.2 billion, or 33 percent.
Along with deposits that grew to P405.1 billion, or 28 percent in the last quarter in 2016, customer loans accelerated the bank’s recurring income to P5.1 billion, or 12 percent by the end of March this year.
Executives attributed the growth to City Savings Bank, a subsidiary of UnionBank, that earned a total interest income of P171.968 million, or 15.79 percent, from P148.513 million after nine months of operation.
Performances in both accounts resulted in a loans-to-deposits ratio of 62.5 percent, well within the median of peer-listed banks.
Thus, this year UnionBank will continue to enhance loans-oriented strategy over trading in securities. Trading gains slightly rose to P0.24 billion, mainly through government’s bond exchange program in January. Along with interbank loans, interest income from trading and investment securities surged by 19.5 percent.
“We’ll focus on building the loan book across all segments—corporate, commercial and consumers. We have large consumer loan book driven by City Savings, but our corporate and commercial loan books are also growing by about 30 percent to 35 percent,” UnionBank President and COO Edwin R. Bautista said in the annual stockholders meeting last Friday at Marco Polo Hotel in Pasig City.
Operating income, or revenues minus operating expenses, also increased to P5.7 billion, or 18 percent. This mainly included service charges, fees and commissions that climbed to P1.15 billion, or 17.9 percent.
Many of them are the results of our capability to allow corporate partners to consume our APIs [application program interfaces] that a major change we acquired this year,” Bautista said.
APIs program computer software to digitize transactions between corporate partners and product and service suppliers, including small and medium enterprises.
In the annual stockholders meeting, UnionBank revealed projects for digital transformation this year to build a cyber-security operations center for online transactions and develop mobile applications for payment services to |corporate partners.
The executives aim to use the fund in satisfying the preference of young professionals or millennials for online banking and addressing its security threats.
“First the whole bank attends to cyber-security issues aggressively and seriously. In a couple of months we will be inaugurating our cyber-security operations center where we will 24/7 be watching cyber-security threats,” UnionBank Chief Technology & Operations Officer Henry R. Aguda said .
“Second, the resurgence of fintech that are coming from various sectors—banking, telecommunications and over-the- top players, like Alibaba and Amazon,” Aguda added.
Thus, UnionBank will intensify its promotion of Selfie Banking through registered EON card that serves as a debit and credit card to enable online interbank transactions and shopping on mobile.
UnionBank is also redefining bank branches into 24/7 service and more personal offices.
“We recently launched Chatbot, a first in the country, where clients can converse with the bank through social media and other messaging applications.
In June we will launch our convergence banking application for those who have been using mobile banking to create similar look and feel for all our online user interface,” Aguda said.
“We are redefining what a bank branch is. We know the millennials don’t usually go to the bank but to mobile banking. By the end of the year, you will be surprised,” Aguda boasted.
