Union Bank earnings down

The Union Bank of the Philippines (Union Bank) has reported a lower net income in the first nine months of 2008 compared to the previous period as it was not spared by the ill effects of the global crisis.

From a net income of P2.57 billion in the first nine months of 2007, earnings dropped to P1.7 billion this year or 33.8 percent lower. It was however slightly higher than the P1.63 billion recorded in the same period in 2006.

Majority of the banks, which already reported its income earnings for the first nine months of 2008, also reported lower numbers due mainly to the influence of the global crisis. 

However, bank executives pointed out that they were still recording net earnings albeit lower than the outstanding performance in 2007.

“In contrast, banks in Europe and the United States are reporting net losses,” they added.

Union Bank chairman and chief executive officer Justo A. Ortiz said that the bank’s performance in the first nine months does not deflect its focus on long-term goals to establish sustained progress against a backdrop of shifting economic cycles.

“The recurrent increase in our deposit base and lending business affirms the bank’s stability and effective strategy execution, which allowed us to capture and optimize opportunities for revenue expansion, in spite of market adversities,” Ortiz added.

Deposits expanded by 44.6 percent to P152.5 billion as of September while its loan portfolio grew by a whopping 71.8 percent to P71.1 billion.

He said that lending to corporate, commercial, and consumer markets were sustained boosting its overall loan portfolio.

Total assets rose by 14.4 percent to P196.1 billion while its capitalization remained adequate at 13.2 percent of risk assets, inclusive of credit, market and operational risk charges.

Union Bank said that the marked expansion in its loan portfolio translated to a stronger recurring income base, as interest income on loans and receivables grew by 18 percent to P3.2 billion end September.

Interest income on trading and investment securities traced a similar pattern, soaring by 51.2 percent to P2.7 billion.

On the other hand, interest expense on deposit liabilities and bills payable contracted by 23.3 percent to P2.8 billion.

Notably, Union Bank’s strategy to anchor growth on more sustainable revenue sources continued to deliver strong results during the third quarter.

Interest income improved by 8.2 percent to P2.7 billion, as income on loans and receivables jumped by 23.7 percent to P1.1 billion. Likewise, interest income on trading and investment securities increased by 55.2 percent to P1.2 billion.

Earlier, Banco de Oro Unibank (BDO) reported a 78-percent drop in net profits while the Metropolitan Bank & Trust Co. (Metrobank) recorded a 32-percent decrease. The Bank of the Philippine Islands (BPI) was not spared as it likewise registered a lower income of 30-percent in the first nine months of the year.