The Bank posted a net income of PhP11.6 billion in 2020 despite credit reserves growing by 4.7x year-on-year or close to PhP7.0 billion more than 2019. Earnings performance translated to a return on equity of 11.9%.
The Bank’s digital strategy gained more traction in 2020 as COVID accelerated the shift of customer behavior towards digital. Customers transacting through digital channels breached 2 million with more than 500,000 new accounts opened via the mobile app. UBX, the Bank’s technology and innovation firm, signed up more than 140,000 MSMEs across its platforms namely i2i, BUX, Sentro, and SeekCap. CitySavings Bank also continued to deliver efficient services to teachers and motorcycle loan borrowers with the help of its mobile sales app.
The growth in customers and digital transactions resulted to strong operating income for the year. Revenues were at an all-time high of PhP42.1 billion driven by the expansion of net interest income by 29% to PhP28.7 billion. Net interest income growth was attributed to higher margins, which increased by 76bps to 4.7% due to: 1) robust CASA growth; 2) reduced funding cost given the low interest rate environment; and 3) shift to high-yielding loans (i.e. consumer, SME, and commercial) as demand for corporate loans declined. Strong trading gains amounting to PhP8.9 billion also boosted topline revenues.
Growth in operating expenses was kept at a single-digit despite robust business growth due to efficiencies from digitization.
Credit cost booked by the Bank was at PhP8.7 billion in 2020 vs. PhP1.9 billion in the prior year as NPLs increased from 3.1% to 5.1%.
As of end December 2020, total assets were at PhP774.5 billion. Our strong earnings performance translated to above regulatory capital requirements, with CET1 Ratio at 15.0% and CAR at 17.0%.
“We enter 2021 cautiously optimistic with a strong focus on balance sheet management and credit underwriting. We expect to sustain customer revenue growth as we continue to achieve operating efficiencies,” noted Jose Emmanuel U. Hilado, CFO and Treasurer.
“I am pleased with the Bank’s 2020 performance despite a challenging year. This was a product of all UnionBankers who continued to push boundaries amidst the crisis. The pandemic became the inflection point that affirmed our digital strategy. As we line up new features in our digital channels and Tech Up especially more of our underbanked and unbanked countrymen, we aim to ramp up digital customer engagement to sustain our momentum in 2021,” said Edwin R. Bautista, President and CEO.