Union Bank profit jumps 21% in ’05

Union Bank of the Philippines has recorded a 21-percent increase in its net income from P2.28 billion in 2004 to P2.76 billion last year, the bank said in a statement.

Union Bank, the Aboitiz group’s commercial bank has been growing by a compounded annual rate of more than 20 percent over the past five years.

Total resources expanded to P108 billion, boosted by the P6-billion expansion in deposits and 27-percent growth in fund floats volume. Deposits grew to P60 billion principally from savings deposits.

"Strong internal capital generation pushed equity base 27 percent higher to P19.5 billion in 2005. It remained among the soundest banks in the industry with a credit risk-adjusted capital adequacy ratio (CAR) of 46 percent, four times the Bangko Sentral ng Pilipinas (BSP) minimum capitalization ratio requirement of 10," the bank said.

Capital markets businesses showed strong revenue growth with both accrual and trading gains growing by more than 50 percent. Consumer and small and medium enterprise (SME) finance likewise posted record growth.

Interest earnings from credit cards, auto loans, mortgage, and Business Line (a loan product secured by customers’ deposits or real property) accounted for more than one-third of Union Bank’s lending income.

Earnings from auto finance business went up by 19 percent year-on-year due to higher loan volume. The bank’s volume of new auto finance bookings grew by 15 percent versus the car industry’s sales growth of 10 percent.

Net income from credit cards increased 35 percent year-on-year with new cards generated reaching close to 45,000.

Return on average equity increased to 15.4 percent last year from 14.2 percent in 2004 while return on average assets stood at 2.6. Improved profitability was achieved on top of the 20-percent increase in provisions for loan losses to P421 million for the year from P350 million in 2004.

Union Bank plans to barge into the top three universal banks by 2010 by averaging yearly an income growth of 25 to 30 percent.