Union Bank of the Philippines said Tuesday its net profit in the first nine months of 2023 declined 19.8 percent to P8.1 billion from P10.1 billion a year ago on elevated operating costs.
UnionBank said in a disclosure to the stock exchange that its operating expenses rose 63 percent year-on-year to P33.5 billion on the full-year impact of the acquired Citi consumer business and UnionDigital.
These new businesses were only included as part of the banking group in the second half of 2022.
It said it spent P3.6 billion on one-time expenses mainly coming from the integration of the Citi consumer business.
UnionBank executive vice president and chief financial officer Manuel Lozano said Citi’s integration costs increased because the bank allocated more time and resources to ensure its smooth migration.
“We also spent on marketing and customer engagement programs to capitalize on the growing consumer segment,” he said.
UnionBank president and chief executive Edwin Bautista said the diversified consumer business allowed to cover for the one-time costs of the bank.
“If we exclude the impact of these non-recurring costs, our ROE would be in double digits. Our topline revenues remain strong. We are confident that once we complete the integration, we can show above-industry profitability we have been known to deliver,” Bautista said.
Net revenues amounted to P52.8 billion, up by 48 percent versus the same period last year. Net interest income grew 34 percent to P37.3 billion, largely attributed to the 18-percent increase in loan portfolio.
Consumer loans grew faster at a pace of 22 percent year-on-year. The bank has one of the highest proportions of consumer to total loans in the industry at 56 percent, resulting in an above-industry net interest margin of 5.3 percent.
Non-interest income grew 93 percent to P15.5 billion, largely due to recurring fee-based income on customer transactions. Its customer base now reached over 13 million, averaging over 2 million new customers per year from 2019.
Total assets as of September 2023 amounted to P1.1 trillion, up by 8 percent from September 2022. Net loans and receivables climbed 18 percent to P531.0 billion, while total deposits grew 6 percent to P724.7 billion.
Bank officials said business fundamentals remained strong and topline revenues continued to record robust growth, because of the bank’s focus on the consumer segment.