MIGRATION OF CITI BUSINESS WEIGHS ON UNIONBANK Q1 NET INCOME

Aboitiz-led Union Bank of the Philippines saw a decline in its first-quarter bottom line, as the lender saw higher operating costs to support the migration of the Citi Consumer business into its systems.

In a regulatory filing to the local bourse on Monday, UnionBank reported a P2-billion net income in the first three months of the year, lower than the P3.4 billion reported in the comparable period of 2023.

This comes as the bank saw a 10% increase in its operating expenses to P11 billion, including a one-time integration cost of P1.1 billion, as the bank completed the final phase of the Citi integration on March 24, 2024.

“While this temporarily affected our profitability, it was a planned initiative aimed at unlocking long-term benefits and efficiencies,” the filing read.

“Now that we have successfully completed the Citi migration, we will no longer bear the one-time costs associated with it starting this month. We will now focus our efforts to realizing the full gains from cross-selling to our growing customer base,” chief financial officer Manuel Lozano said.

UnionBank first announced the takeover of Citigroup Inc,’s consumer banking business in the Philippines in 2021, as the American banking giant closed its consumer banking in 13 countries to refocus its global operations in areas with the “greatest scale and growth potential.”

The bank’s first-quarter revenues grew by 14% on the back of higher consumer loans which accounted for 59% of the total loan portfolio, along with higher net interest margins, and transaction fees.

Net interest income rose 17% to P13 billion, while non-interest income excluding trading gains increased by 13% to P4.7 billion.

“Our first quarter performance is in line with our expectations. We are even ahead in terms of key metrics that matter for sustainable growth, such as number of retail customers, net interest margins, and fees-to-assets,” Lozano said. — RSJ, GMA Integrated News

This article Migration of Citi business weighs on UnionBank Q1 net income was originally published in GMA News Online.

2024-04-29T05:08:14Z dg43tfdfdgfd