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| English: A logo for the Union Bank of the Philippines (Photo credit: Wikipedia) |
The first-quarter performance translated to a return on equity of 29 percent. The bank also managed to hit early in the year nearly half of its P8.5-billion net profit goal for the full year, which means the bank would have to readjust targets, Union Bank president Victor Valdepeñas said in an interview.
“We thought we’ll grow by 15 percent this year but it now seems to be a conservative target given our first-quarter performance. As the market continues to be quite positive in terms of flow of funds, I will not be surprised if we’ll see our income growing by 20 percent,” he said. However, the bank would have to wait for the second -quarter results before overhauling its targets for 2013, he added.
Valdepeñas said the bank’s three-month results, which topped what was already a strong performance in the same period last year, could be attributed to stable margins, lower cost of funds, improved productivity and strong contribution from subsidiaries. The first-quarter results already included the contribution of newly acquired thrift bank City Savings.
Based on the bank’s regulatory filing, net interest income went up by 15.8 percent to P2.05 billion from year-ago level.
Valdepeñas estimated that margins had stabilized at more than 3.4 percent.
“While the yields have been under pressure, our cost of funding has gone down much slower,” Valdepeñas said.
The bank’s loan book declined to P98.13 billion from P115.17 billion a year ago. He said this was because certain loan accounts, particularly auto loans, had matured faster than the bank’s new bookings of this type of loans. He said the bank was rationalizing its auto lending business while the credit card segment remained flat as Union Bank had become very “selective.”
“When demand from household continues to increase, we have to be wary,” he said. “Nonetheless, we’re still pushing that because I think consumer financing will grow faster than corporate loans. Corporations can now go directly to the public and raise equity given very good prices and the very good environment.”
For the full year, Union Bank aims to grow its loan book by 15 to 20 percent, Valdepeñas said.
http://business.inquirer.net/119189/union-bank-profit-jumps-by-41
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