In the third quarter of 2024, net income surged to P3.5 billion, up by 76 percent from the third quarter of 2023 and 14 percent from the previous quarter.
The bank’s growth is driven primarily by its expanding consumer loan portfolio after its takeover of Citi Philippines’ assets.
Interest earnings growth
Net revenue for the first nine months of 2024 reached P57.7 billion, reflecting a 9.2-percent rise compared to P52.8 billion in the same period last year.
Net interest income rose by 14.2 percent to P42.6 billion, with net interest margins improving by 58 basis points year-on-year, reaching 5.9 percent, one of the highest in the industry.
Consumer loans now make up 60 percent of the bank’s total loan portfolio, nearly three times higher than the industry average, while operating expenses totaled P33 billion, with IT-related expenses dropping by 17.3 percent following the integration of Citi’s consumer business.
The bank’s customer base grew to over 15 million, including nearly 500 thousand new credit card clients. Total assets as of September 2024 stood at P1.1 trillion, with total loans and receivables at P523.2 billion and low-cost CASA deposits at P419.4 billion.
Management’s view
“The bank efficiently allocated its capital to expand its consumer lending activities, which was evident in our record-high net revenues. The leading indicators brought about by our growing retail customers are very promising,” UnionBank CEO Edwin Bautista said in a statement.
“Our new-to-bank credit card customers per month are averaging 2.5 times higher than last year. The active users of our digital channels have increased to 5.6 million from 4.7 million last year. Consequently, we have seen digital fund transfer transactions growing by 40 percent year-on-year. These customer metrics are the ones driving revenues today and onto the future,” he added.
CFO says there is room for margin expansion
“The large proportion of our consumer portfolio is reflected in the continuous improvement of the bank’s net interest margin. With the improving macroeconomic backdrop and expectations of declining interest rates, there is still room for further margin expansion,” UnionBank chief financial officer Manuel Lozano said.
“We should be able to reprice our funding cost downwards, while sustaining the high yields coming from our consumer business,” he added.
