THE pandemic has transformed the Philippine banking industry to one that is about agility and relevance rather than size and scale, according to the Asia United Bank (AUB).
In his speech at the 10th listing anniversary of the bank last Wednesday, AUB President Manuel A. Gomez said size mattered in the banking industry in the past; making it difficult for smaller players to survive.
Gomez said a decade ago, AUB had to compete with “bigger and older competitors” with abundant resources to put up branches nationwide and abroad.
“The pandemic was really a game changer. Suddenly, customers started moving to online and mobile platforms when they bank. Technology has shifted the game from size and scale to agility and relevance. And for AUB, this is the level playing field,” the executive said.
Gomez said technology allowed banks like AUB to adjust to the demands of “modern” consumers who have 24/7 service needs and have different preference in terms of accessing these services.
By investing in technology and making it a competitive advantage in the past decade (from 2013 to 2022), AUB tripled its total assets to P340 billion from P105 billion and its net income to over P6 billion from P1.5 billion.
FROM a Return on Eqiuty (ROE) of 9.96 percent in 2013, AUB posted a 16.12-percent ROE in 2022, higher than prior to the pandemic.
“Thanks in part to the proceeds from our IPO [initial public offering], we were already embarking on several digital banking innovations years prior to the pandemic. These innovations include [our] mobile app, our e-wallet, pioneering payments via QR [quick response] and the early adoption of the national QR PH code, and our all-in-one digital payment acceptance product,” Gomez said.
He added that AUB’s dividend yield has more than doubled to 4.82 percent in 2022 from 2.09 percent in 2016. The bank’s cost-to-income ratio steadily declined to 41.7 percent in 2022 from 56.66 percent in 2013.
In the first three months of 2023, AUB and its four subsidiaries booked a P2-billion net income, 54-percent higher than the same period in 2022. This resulted in ROE of 19.9 percent and a return on assets of 2.5 percent.
“As of the first quarter of this year, cost comprised just a third of our income—among the best, if not the best, in the industry,” Gomez said. “This efficiency is solid proof that our sustained investments in automation enhancements and process optimization to deliver quality services to our customers efficiently at less cost is paying off.”
GOMEZ said that earning a reputation as one of the fastest-growing publicly listed universal banks today is no small feat given the series of crises it had to overcome, starting from the 1997 Asian financial crisis when the bank started.
AUB first opened in a single room at the Parc Royale Condominium on Doña Julia Vargas Avenue in Ortigas Center, Pasig City on October 31, 1997, just a few months after the Asian financial contagion.
On the same year, the Bangko Sentral ng Pilipinas (BSP) implemented several rounds of capital increases among banks, tightened the rules on classifying loans and loan loss provisioning, and imposed stricter policies for the issuance of new banking licenses. It also obligated banks to disclose more information to the public.
“All these were meant for only the fittest to survive. But they also made the operating environment more hostile for a young player like AUB,” he said.
To compete, Gomez said, AUB acquired Asiatrust Bank, the Rural Bank of Angeles, and Cavite United Rural Bank to grow its network. They also offered shares to the public to fund their growth and play catch up with the more established players in the industry.
Image credits: Asia United Bank Corp.