UnionBank Q1 profit slides 40% after Citigroup integration
UNION BANK of the Philippines, Inc. (UnionBank) booked a net income of P2.011 billion in the first quarter, with expenses related to its integration of Citigroup, Inc.’s local consumer business into its operations affecting its profit, it said on Monday.
The bank’s net income last quarter was down by 39.79% from the P3.34-billion attributable net profit that it booked in the comparable year-ago period, based on its unaudited financial report for the first quarter of 2023.
UnionBank’s latest financial statement was unavailable as of press time.
“The bank allocated resources towards the migration of the acquired Citi consumer business into UnionBank systems. While this temporarily affected our profitability, it was a planned initiative aimed at unlocking long-term benefits and efficiencies,” the lender said in a disclosure to the stock exchange.
UnionBank completed the integration’s final phase on March 24, it said.
“Our first-quarter performance is in line with our expectations. We are even ahead in terms of key metrics that matter for sustainable growth, such as number of retail customers, net interest margins, and fees-to-assets. Now that we have successfully completed the Citi migration, we will no longer bear the one-time costs associated with it starting this month.
We will now focus our efforts to realizing the full gains from cross-selling to our growing customer base,” UnionBank Chief Financial Officer Manuel R. Lozano said in a statement.
The bank’s net interest income grew by 17% year on year to P13.45 billion in the first quarter. Its net interest margin went up by 59 basis points to 5.7%. Meanwhile, other income stood at P4.905 billion.
Its revenues grew by 14% year on year, supported by the growing share of consumer loans in its portfolio, higher margins and income from transaction fees.
“The bank’s consumer loans now account for 59% of total loan portfolio, nearly three times higher than industry average,” UnionBank said.
Meanwhile, its operating expenses went up by 10% to P11.083 billion in the first quarter due to costs related to the migration of Citi’s retail accounts into UnionBank’s systems.
“A one-time integration cost of P1.1 billion was incurred in the first quarter of 2024,” it said.
“Additionally, the bank’s marketing investments resulted in a significant increase in new-to-bank credit card customers, more than doubling last year’s customer acquisition rate. We now have a bigger base of customers who we can offer our other products and services to,” UnionBank added.
The bank’s loans stood at P520.758 billion in the first quarter. On the funding side, its deposits were at P692.114 billion, with its low-cost current account, savings account or CASA deposits at P431 billion.
Total assets stood at P1.146 trillion at end-March. Total capital funds were at P174.589 billion.
UnionBank’s shares declined by P2 or 4.84% to close at P39.35 apiece on Monday. — A.M.C. Sy
