051107: Union Bank doubles net income to P1.63B in 1st qtr

By Ted P. Torres
The Philippine Star 05/11/2007

The Union Bank of the Philippines (Union Bank) reported a net income of P1.63 billion in the first quarter of 2007, double the P792 million recorded in the same period last year.

The bank said net interest income increased 54.6 percent, while fees and commissions rose 55.6 percent, and trading gains went up 57 percent.

Asset base expanded by more than P100 billion to P207.6 billion in March 2007.

The Aboitiz-led commercial bank tripled its loan book to P39.7 billion end March from P13.3 billion during the same period last year. Deposits expanded to P149.4 billion from P58.2 billion.

Capital base rose 18.2 percent to P21.4 billion.

Union Bank president Victor Valdepeñas said they hope to achieve a 20-to 25-percent income growth this year.

"According to analysts, a 20-to 25-percent net income growth is possible based on our first quarter numbers and last year’s performance," Valdepeñas said during the listing of P4.62 billion worth of new shares at the Philippine Stock Exchange (PSE) yesterday.

Union Bank was the second fastest growing domestic bank from 2001 to 2005 with a compounded annual asset growth of 19 percent.

Including 2006, its compounded annual asset growth improved to 28 percent due to the combined impact of International Exchange Bank (iBank) acquisition and subsequent organic growth, it said in a separate statement.

Union Bank further cleaned up books by selling P2 billion worth of selected bad loans to Deutsche Bank A.G., London in March 2007. As a result, UnionBank’s non-performing loans ratio eased to 3.5 percent at the start of April from 4.9.

The listing of P4.62 billion offering to the domestic and international markets was three times oversubscribed, with approximately 50 percent of investor demand coming from the United States and Europe.

Moody’s Ratings raised UnionBank’s Bank Financial Strength Rating (BFSR) outlook from negative to stable due to the expected improvement in its capitalization ratio. It is the second highest rating given by Moody’s to a Philippine commercial bank.

"Union Bank will use the amount to strengthen its capital adequacy ratio and boost lending to its customers and clients involved in small and medium enterprises, and large infrastructure activities," PSE official said based on the bank’s earlier declarations.

Union Bank experienced a full year income decline for the first time in several years due mainly to its acquisition of iBank, dropping by 8.8 percent to P2.51 billion in 2006 from P2.76 billion in 2005. This was attributed "to the industry-wide margin compression as interest rates declined further."

Net income in 2004 was at P2.28 billion, from P2.15 billion in 2003, P1.5 billion the year before, and P1.1 billion in 2001.

 

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