UnionBank Q2 net profit falls over 17% as fee income drops

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UNIONBANK of the Philippines, Inc. said net profit fell in the second quarter following a decline in its “other” income.

UNION BANK of the Philippines, Inc. said net profit fell in the second quarter following a decline in its “other” income.

In a regulatory filing Monday, the Aboitiz-controlled lender said net profit in the three months to June was P1.78 billion, down 17.2% year-on-year.

In the six months to June, UnionBank’s net profit was P4.72 billion, up 8% from a year earlier.

“Other” income came in at P1.6 billion, down 13% from a year earlier.

The main component of “other” income was service charges, fees and commissions, which fell 27.5% year-on-year to P818.85 million.

UnionBank’s financial assets posted a loss of P13.22 million, a reversal from the P67.16 million gain a year earlier.

Miscellaneous income meanwhile rose 25.5% to P801.62 million.

Meanwhile, net interest income rose 1.25% to P4.2 billion during the quarter.

Interest income on loans and other receivables grew 20.4% year-on-year to P4.84 billion.

In a separate statement, the bank said total loans amounted to P313 billion, up 18% year-on-year, with retail loans accounting for 33% of UnionBank’s total loan book.

Deposits on the other hand were at P452.9 billion in the second quarter.

Overall, UnionBank’s assets grew to P623.2 billion at the end of June, up 12.8% year-on-year.

The return on equity was 12.8%, while return on assets was 1.6%.

“We are ahead of our target for the year despite margin compression in the first half due to higher interest rates and regulatory compliance,” UnionBank Treasurer and Chief Financial Officer Jose Emmanuel U. Hilado was quoted as saying in the statement.

He added that the bank is expecting recurring income to drive profitability for the remainder of the year.

“We anticipate margins to improve as loan rates start to catch up against deposit costs.”

Meanwhile, Edwin R. Bautista, UnionBank president and chief executive officer, said that the bank is making progress on its digital transformation.

In May, UnionBank launched Project i2i, a blockchain-based platform connecting rural banks into a financial network.

“We look forward to launching more innovations in the industry as we aim to be among the pioneers in the field of blockchain technology and the token economy,” Mr. Bautista added.

UnionBank shares closed at P84.50, up 30 centavos or 0.36%. — Karl Angelo N. Vidal