Union Bank income dips to P2.51B in 2006

Union Bank of the Philippines registered a lower full-year income last year due mainly to its acquisition of International Exchange Bank (iBank).

In a statement, Union Bank said last year’s net income contracted 8.8 percent to P2.51 billion from P2.76 billion, which was also attributed "to the industry-wide margin compression as interest rates declined further."

However, the bank said net income in the last quarter of 2006 grew by 5.6 percent from P838 million in 2005 to P885 million.

Also, revenues grew 21 percent to P2.3 billion during the quarter in review as interest differential income increased by more than half.

Meanwhile, core earnings (net revenues less trading gains and miscellaneous items) expanded by 40 percent to P4.6 billion last year from P3.3 billion in 2005.

Interest differential income went up by 40.3 percent to P3.8 billion as loan portfolio grew three-fold.

Service charges, fees and commissions more than doubled to P800 million.

"The acquisition of iBank as well as organic expansion pushed asset base to P184.8 billion, equivalent to a growth rate of 72.8 percent. Deposits almost doubled to P116 billion," the bank said.

Strong internal capital generation increased capital to P19.9 billion. Union Bank said it plans to issue $100 million worth of shares within the first half of the year.

It has tapped the services of Macquarie Securities Inc. as its underwriter for the primary offer.

"The plan is to finish the offering within the first quarter of the year," Union Bank president Victor Valdepenas was earlier quoted. Target listing will commence on April 30. The capital-raising exercise will be undertaken through the issuance of unissued shares from its authorized capital stock.

The $100-million will be utilized mainly for its maturing $125 million worth of senior debt at an interest rate of 7.3 percent underwritten in 2004, as well as fund integration activities directly related to its acquisition of iBank.

It will likewise strengthen the bank’s capital adequacy ratio (CAR) of 16 percent, which after its purchase of the 98 percent stake in iBank last June, dropped from a pre-acquisition high of 46 percent.

Union Bank, with a market capitalization of over $700 million, also plans to use the proceeds to expand its existing business lines, increase lending and seize opportunities for growth, including possible acquisitions.