UNIONBANK of the Philippines, Inc. booked lower net earnings.

UNIONBANK of the Philippines, Inc. tallied a lower net profit in the first quarter, even as its net interest earnings went up.

In a regulatory filing on Monday, the Aboitiz-led lender said it booked a P2.16-billion net income in the first three months of the year, down 26% from P2.93 billion recorded in the same quarter in 2018.

This translated to a return on equity of 9.6% and return on assets of 1.3%.

On a quarter-on-quarter basis, its net profit climbed 75% compared with its income in the October-December period.

The lender posted a lower bottom line year-on-year even as it booked higher net interest income at P4.66 billion in the January-March period, up 12.6% from P4.14 billion recorded in the same period in 2018.

Net loans and receivables were at P315 billion, up 7.5% from last year’s P293.14 billion, with retail loans accounting for more than a third of the bank’s lending book.

Deposits, on the other hand, declined 3.2% to settle at P425.6 billion in the first quarter from the P439.59 billion logged in a comparable year-ago period.

Other income also declined 16% year-on-year to P2.3 billion from P2.74 billion.

Operating expenses stood at P4.3 billion, up 23.6% from P3.48 billion recorded in the same period in 2018.

Overall, UnionBank’s assets grew 15.8% to P704.5 billion from the P608.44 billion recorded last year.

In a statement, UnionBank Treasurer and Chief Financial Officer Jose Emmanuel U. Hilado said yields are starting to catch up in the first three months of the year as assets reprice.

“With a more stable interest rate and lower inflation environment this year, we expect margins to improve towards the end of the year and recurring income to have an increased contribution to our bottom line,” Mr. Hilado said.

Edwin R. Bautista, UnionBank president and chief executive officer, added that the lender is confident it will be able to sustain the double-digit growth expansion of its lending business this year to mark its fifth year of above-industry loan growth.

He said the bank will continue its thrust towards digitalization, including setting up more concept branches called “The ARK,” rolling out more functionalities in its online and mobile platforms as well as deploying 100 cadets from the bank’s Blockchain Institute.

UnionBank shares closed at P60.55 apiece on Monday, gaining five centavos or 0.08% from its previous finish. — Karl Angelo N. Vidal