Union Bank of the Philippines’ (UnionBank) shift toward a higher-margin income business model has been instrumental in driving growth. With the fourth-largest consumer loan portfolio among banks, comprising 58% of total loans, the bank has witnessed a 73 basis points expansion in net interest margin to 5.5%. This has resulted in a 34% increase in net interest income, reaching P52 billion.
At UnionBank’s annual stockholder’s meeting, Edwin Bautista, president and CEO, emphasized customer experience and shareholder return amid profitability challenges as key growth drivers for the Aboitiz-led bank.
However, profitability faced a temporary decline in 2023, with net income decreasing to P9.2 billion from P12.7 billion in 2022, resulting in a single-digit return on equity. This was anticipated due to parallel IT systems during the integration of Citibank’s consumer business. Operating expenses were up by 43% or P45 billion, primarily due to investments in the acquisition and integration of Citibank’s consumer business.
“Our priority is to unlock the full potential of the acquired Citibank consumer banking business,” Bautista said. “The Citi consumer business has consistently exceeded our expectations.”
The completion of the integration and migration of Citibank’s business into UnionBank by March 2023 eliminates the additional service costs incurred from Citibank, positioning UnionBank for enhanced profitability.
Customer base
Non-interest income surged by 41% to P19 billion, fueled by a 54% growth in fee-based income, attributed to increased customer transactions. Union Bank remains confident in its ability to scale up its business, leveraging a growing customer base and high top-line revenues to deliver stronger shareholder returns.
UnionBank’s customer base has surged, reaching approximately 14 million individuals, with an annual increase averaging around 2 million customers since 2019. According to Bautista, the UnionBank Online app is “the most downloaded and highest-rated banking app on the Google Play Store, reflecting the bank’s commitment to customer satisfaction.”
For 2024, UnionBank has outlined three key priorities: unlocking the full potential of Citibank’s consumer banking, sustaining market leadership in digital banking, and scaling up retail banking efforts.