Union Bank of the Philippines (UBP), the lending arm of the Aboitiz Group, said Monday it plans to raise up to P10 billion from stock rights offering.
UBP said in a stock exchange filing its board approved the planned fund-raising activity, which is intended for the capital infusion to UnionDigital, projected retail loan availments and/or for general corporate purposes.
The bank has yet to set other terms of the offering including the offer price, entitlement ratio and timetable.
UBP reported that net income in 2023 reached P9.2 billion, down 27.5 percent from P12.7 billion in 2022 as the bottom-line was affected by integration costs related to the Citi consumer business acquisition.
“Our overall profitability, however, was affected by front-loaded costs incurred in the integration of new businesses. In a way, we are temporarily carrying the cost of running on two systems – we are paying Citi a fee to support the business on their platform while we develop and fully transition all ex-Citi retail customers to our own system. These investments are necessary to ensure the sustainability of our consumer business growth moving forward,” said UBP chief financial officer Manuel Lozano.
Net revenues increased 36 percent to P71 billion from the same period last year as net interest income reached P52 billion, up 34 percent year-on-year.
The bank attributed remarkable growth in consumer lending.
Consumer loans accounted for 58 percent of total loan portfolio, including credit cards, mortgage loans, personal/salary loans and vehicle loans.
Non-interest income was up by 41 percent to P19 billion, with fee-based income higher by 54 percent to P10 billion.
Operating expenses, however, were up by 43 percent to P45 billion on account of the full-year impact of the acquired Citi consumer business and UnionDigital.
UBP president and chief executive Edwin Bautista said the new businesses wetre now yielding promising results for the bank.
“The acquired Citi consumer business has consistently surpassed expectations, while UnionDigital attained profitability throughout its first full year of operations. We are experiencing early returns on these strategic investments, with leading indicators pointing towards a sustained increase in transactions over time,” Bautista said.
“This is evidenced by a growing individual depositor base, an uptick in new-to-bank credit cards, record-breaking downloads of our mobile app, and net promoter scores that surpass industry standards. Our commitment extends to completing the seamless integration of these new businesses this year. Immediately after, you will see a stronger and more profitable,” Bautista said.