P2.76B record income for Union Bank in 2005

Aboitiz-led Union Bank of the Philippines hit a record P2.76 billion in net income, which 21 percent higher than the previous year's P2.28 billion.

The bank's net income has been growing by a compounded annual rate of more than 20 percent in the past five years. Return on average equity increased to 15.4 percent in 2005 from 14.2 percent in 2004 while return on average assets stood at 2.6 percent.

Improved profitability was achieved on top of the 20 percent increase provisions for loan losses to P421 million for the year from P350 million in 2004.

In a press statement, Union Bank revealed that the capital markets businesses of the bank showed very strong revenue growth with both accrual and trading gains growing by more than 50 percent.

Consumer and small and medium enterprise finance likewise showed record growth. Interest rate 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 the bank's lending income. Earnings from auto finance business went up 19 percent year-on-year due to higher loan volume.

The bank's volume of new auto finance bookings grew by 15 percent versus car industry sales growth of 10 percent during the comparable period. Net income from credit cards increased 35 percent year-on-year with new cards generated reaching close to 45,000.

With the improvement in cards profitability and credit quality, Union Bank was cited in October last year the Most Outstanding Credit Card Company by Consumer League of the Philippines Foundation Inc.

Total resources continued to expand to end the year at P108 billion, boosted by the P 6 billion with hefty growth recorded in savings deposits. Higher brand awareness, stronger sales culture, innovative products and services, and more Information Technology (IT) platform have been propping up the Bank's fund generation business.

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

Union Bank recently added the Bureau of Customs (BoC) to its OneHub.Gov platform with the implementation of its Customs Duties e-Payment facility.