ASIA UNITED Bank Corp. posted lower earnings as it ramped up loan loss reserves. — BW FILE PHOTO

ASIA UNITED BANK Corp. (AUB) booked a double-digit drop in its consolidated net income in the second quarter on higher loan loss provisions amid the coronavirus pandemic.

AUB and its subsidiaries’ net earnings dropped 24% to P1.114 billion last quarter from the P1.461 billion in the same period last year, its unaudited financial statement filed with the bourse on Monday showed.

The bank’s total operating expenses, including provisions for losses, jumped 79% to P2.825 billion “mainly due to the 715% increase in provision for credit and impairment losses as the bank factored in the effect of the pandemic.”

“Significant elements of the group’s net income for the three- month period ended June 30, 2020 and June 30, 2019 came from its continuing operations.”

The lender’s net interest income rose 14% to P2.6 billion on lower interest expenses. Net interest margin stood at 4.57% as of June, up from 4.55% a year ago.

“Increase in interest income from deposits from banks and others were offset by the decrease in interest income from loans and receivables and trading and securities,” it said.

Its other operating income climbed 44% to P1.4 billion in the second quarter, buoyed by the 94% increase in trading and securities gains, but was tempered by the 35% decline in foreign exchange gains due to market volatility.

In the first half, AUB posted a consolidated net income of P2.3 billion, down 10% from a year ago, as the 18% increase in its operating earnings was partly offset by the P1.2 billion it set aside for loan loss reserves.

“Loans and receivables increased by 8%…to P171.7 billion as of June 30, 2020. Propelling the growth were commercial loans and other loan segments such as housing, auto, and salary loans,” the bank said.

AUB’s nonperforming loan (NPL) ratio was at 1.19% at end-June, up from 1.01% a year earlier. Its NPL coverage ratio stood at 118.4%, also higher than the 72.48% logged as of June last year.

Meanwhile, total deposits rose 10% to P230.3 billion from P210.2 billion in the first half, largely due to higher demand deposits.

Its net loan-to-deposit ratio stood at 74.52% as of June, down from 78.58% a year ago.

AUB’s total assets hit P289.011 billion as of June, up from the P251.67 billion logged in the same period last year.

Its return on assets and return on equity were at 1.7% and 13.9% as of June, respectively, down from 2.22% and 17.62% a year earlier.

The bank posted a common equity Tier 1 ratio of 13.81%, higher than the 13.34% posted a year ago, while its capital adequacy ratio was at 16.93%, up from 16.66%.

The bank’s shares dipped 3.43% to close P45.05 apiece on Monday from the Friday’s finish of P46.65 each. — B.M. Laforga