The consistent expansion of Union Bank of the Philippines’ (UBP) consumer lending activities saw its net income reach P8.6 billion for the first nine months of 2024. In the third quarter of 2024 alone, net income was at P3.5 billion, an increase of 76% compared to the same period last year and 14% compared to the previous quarter.
“The bank efficiently allocated capital to expand its consumer lending activities, which is evident in our record-high net revenues. The leading indicators brought about by our growing retail customers are very
promising. Our new-to-bank credit card customers per month are averaging 2.5x higher than last year,” said UPB chief executive officer (CEO) Edwin Bautista.
Bautista added that the number of active users of UBP’s digital channels has increased to 5.6 million from 4.7 million last year. “Consequently, digital fund transfer transactions have grown by 40% year-on-year. These customer metrics drive revenues today and onto the future.”
In a statement, the bank said it had recorded net revenues of P57.7 billion for the first nine months of 2024, which is 9.2% higher than the P52.8 billion recorded in the same period last year. The performance improvement is mainly attributable to the expanding parent bank’s consumer portfolio.
Net interest income grew by 14.2% to P42.6 billion as net interest margin improved by 58 bps year-on-year.
The bank’s net interest margin is among the highest in the industry at 5.9%. Moreover, the bank can generate fee income as a proportion to its assets at 1.0%. This is more than double the Philippine banking
industry’s average. Consumer loans now account for 60% of its total loan portfolio, nearly 3x higher than the industry average.
The bank’s operating expenses stood at P33.0 billion. IT-related expenditures decreased by 17.3% compared to the first nine months of 2023. The downward trend in IT expenses started when we concluded the integration of the acquired Citi consumer business earlier this year.
The bank continued to invest in customer acquisition, service delivery, and client engagement to maintain its strong momentum in the growth of its consumer business. This has resulted in solid growth in our customer base, now over 15 million as of September 2024. This includes close to 500 thousand new credit card clients this year. Total assets as of September 2024 ended at P1.1 trillion.
Total loans and receivables – net reached P523.2 billion, while low-cost CASA deposits at P419.4 billion.
“The large proportion of our consumer portfolio is reflected in the continuous improvement of the bank’s net interest margin. With the improving macroeconomic backdrop and expectations of declining interest rates, there is still room for further margin expansion. We should be able to reprice our funding cost downwards while sustaining the high yields coming from our consumer business,” said Manuel Lozano, chief financial officer.