UnionBank books decline in net income at end-Sept.

UNIONBANK of the Philippines, Inc. reported lower net income in the first nine months of the year due to increasing interest rates and its inability to issue credit for teachers.
In a regulatory filing on Monday, the Aboitiz-led UnionBank said it booked a P6.1-billion net profit in the January-September period, down 4.7% from the P6.4 billion tallied a year ago.
Jose Emmanuel U. Hilado, UnionBank Treasurer and Chief Financial Officer, said the rise in interest rates and the absence of new loan releases to teachers affected the bank’s margins.
Earlier this year, the Department of Education (DepEd) suspended its automatic payroll deduction system for loans and insurance payments until June as it worked on new guidelines, making CitySavings Bank, the thrift banking arm of UnionBank, unable to issue loans for teachers.
“We expect margins to improve as assets reprice and now that CitySavings’ access to DepEd’s automatic payroll deduction system has been resolved,” Mr. Hilado was quoted as saying in the statement.
Despite booking lower net income in the first nine months, UnionBank saw sustained double-digit growth in its customer businesses.
UnionBank saw its total loans surged 18.6% year-on-year to P315.3 billion, with retail lending accounting for 33% of its total portfolio.
Deposits, on the other hand, stood at P441.4 billion.
The bank’s earning performance translated to an annualized return on equity at 11% and a return on assets at 1.3%.
Net revenues grew 3.3% to P18.9 billion from last year’s P18.3 billion.
Overall, its total assets were at P643 billion, up 17% from the P549.4 billion recorded a year ago.
“We remain confident in sustaining our robust earning asset growth which shall be supported by our successful P10-billion rights offering,” Mr. Hilado added.
Last month, the bank issued 158.8 million common shares through a stock rights offer priced at P62.97 apiece to support expansion.
The bank is set to raise another P20 billion through issuance of bonds or commercial papers which can be done in multiple tranches.
UnionBank shares ended Monday’s session at P66.95 each, gaining P1.15 or 1.75%. — Karl Angelo N. Vidal