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UCPB income slips in first nine months

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UCPB branch
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By Melissa Luz T. Lopez, Senior Reporter

THE United Coconut Planters Bank (UCPB) saw its net income slip as of the third quarter as it reeled from lower trading gains and higher borrowing costs.

The state-owned bank reported a P2.91 billion profit for the first nine months, 4% lower than the P3.031 billion it made during the comparable period in 2017.

In a statement sent on Friday, UCPB attributed the lower income to rising interest rates that “affected the bank’s net interest margins,” which drove net interest income lower to P8.31 billion from P8.62 billion previously.

This came despite more upbeat lending activities, as the bank’s loan portfolio grew by 11% to reach P178.48 billion as of end-September. The expansion was largely driven by the consumer segment.

Benchmark interest rates have risen by 175 basis points after five straight rate hikes by the central bank, which were done to rein in price expectations as inflation surged beyond the 2-4% target set for 2018.




Non-interest revenues also slipped to P1.82 billion compared to P1.86 billion previously due to weak trading gains, particularly from fixed income securities. On the other hand, the bank posted higher collections from service charges, fees, bancassurance commissions and foreign exchange fluctuations.

UCPB has been cross-selling insurance products from its sister firms United Coconut Planters Life Assurance Corp. and UCPB General Insurance Co. since April last year, which have “significantly increased” compared to a year ago.

UCPB President and Chief Executive Officer Higinio O. Macadaeg, Jr. said he expects the current “challenging environment” to persist until 2019, but identified specific business segments which are expected to help sustain expansion.

“[W]e will focus on businesses where we are particularly strong such as consumer lending, especially the real estate segment, and bancassurance, which stand to grow with the continued expansion of the bank’s consumer loan portfolio.” Mr. Macadaeg was quoted as saying in the statement.

In January, Mr. Macadaeg said they were looking at a 15-20% profit growth this 2018. Last year, the bank saw a P4.08-billion bottom line which grew by 22% from 2016.

He added that the lender will also set aside more funds to cover more potential loan losses, as the bank looks to grant more credit lines.

The government’s 10-year financial support to UCPB for its financial rehabilitation program expires this year, and Finance Secretary Carlos G. Dominguez III has said that the government is not keen on extending the aid.