UNIONBANK of the Philippines, Inc. expects an uptick in loan growth next year driven by the brighter prospects in the domestic economy.
Executives of the Aboitiz-led bank said on Friday they expect the lending portfolio to expand by 10-15% as they anticipate lower interest rates.
“It should be 10-15%,” UnionBank Treasurer and Chief Financial Officer Jose Emmanuel U. Hilado told reporters, following the listing ceremony of the bank’s maiden peso bond offer.
UnionBank President Edwin R. Bautista said the bank’s loan growth will pick up “if interest rates will go down.”
“In the last few days, [the economy] is looking better, with the inflation rate…really going down, exchange rates positive and then the US is saying hindi muna sila mag-i-increase (they will take a pause in increasing their interest rates),” he added.
“When you look at those factors, including the lower oil prices, interest rates are really going to move down.”
The Bangko Sentral ng Pilipinas is widely expected to hold off its policy tightening during its December 13 meeting as the market sees signs that inflation started to slow down, evidenced by the November print.
Prices of basic goods and services increased at a 6% pace last month from a year ago, slower than the nine-year high print of 6.7% in September and October, due to slower price increases for food and non-alcoholic drinks.
Given that the interest rates are seen to go down, Mr. Bautista said the corporates might hold off their borrowings in the first half of 2019.
“Most of our clients are saying the cost of funds are higher and they are shelving some of the projects. Now, I think they are going to build again since the outlook is good,” he said.
To continue its “aggressive stance” in growing its loan book, the Unionbank went to the capital market to raise funds.
“We’ve been growing at about 15%. We just need to continue that momentum. But of course, to continue that, we needed capital,” Mr. Bautista noted.
On Friday, the bank has issued P11 billion worth of peso fixed-rate bonds, carrying an interest rate of 7.061% annually to be paid quarterly until 2020.
The listing marks the maiden tranche of its P20-billion bond or commercial paper program approved by its board last Aug. 31. — K.A.N. Vidal

RELATED ARTICLESMORE FROM AUTHOR