Union Bank ‘on track’ to P8.7B net in 2015

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Valdepeñas to end 19-year career as president

The Aboitiz family-led Union Bank of the Philippines (UnionBank) is aiming to earn P8.7 billion in net income this year.

In a press briefing after its annual stockholders meeting (ASM), UnionBank’s outgoing president Victor Valdepeñas said the bank is “on track” to grow its net income to P8.7
billion by the end of the year, up from P8.4 billion in 2014.

“We target P8.7 billion this year versus P8.4 billion last year. Despite a lower first-quarter, we’re still on track. We have some positions, and we have a lot of ongoing projects. More or less, we will be happy with a 5 percent improvement,” Valdepeñas said.


A quarter of the P8.7 billion profit target will come from its subsidiary City Savings Bank (CSB), which is expected to earn between P2.8 billion and P3 billion this year from P1.8 billion in 2014, Valdepeñas said.

In the first three months of 2015, UnionBank’s net income fell to P1.48 billion from P2.4 billion the same time last year largely due to trading gains that dropped to P540 million from P1.07 billion a year ago.During today’s stockholders’ meeting, UnionBank was announced that Valdepeñas, 68, will step down as president by yearend. He has served as the bank’s president for 19 years, the longest serving in the industry.

Eugene Bautista will take over as president starting January next year. Other new executives are Bobby Reyes as chief finance officer, and Eugene Acevedo as the chairman of City Savings Bank.

Valdepeñas told reporters that UnionBank is programming P1 billion in capital expenditures (capex) this year, bulk of which will “beef up operating systems.”

These include the migration to new systems, and the expansion of the branch networks of both UnionBank and City Savings by 15 to 20 branches in the next six months.

Valdepeñas said UnionBank will be mostly expanding in urban areas, such as the Fort Bonifacio, Mall of Asia complex and the Cebu central business district. City Savings will expand across Luzon, including Metro Manila, after firming up its base in the Visayas and Mindanao.

Valdepeñas said lending will fuel growth, with the ratio of consumer to non-consumer loans shifting to 60-40 from the existing 50-50.

“We are putting emphasis in expanding our loan book. In view of the rising interest rates, we’re moving into more of lending, trying to contain our trading book because we expect in the near future that the pressure of interest rates will be felt in the US, and more on the foreign currency,” Valdepeñas said.

“We revolve around three areas: in mortgages and credit cards on the consumer side, as well as teachers’ loans in City Savings. We expect growth in loans will be in these areas,” he said.

Beyond organic growth, UnionBank also is still keen on acquiring Export and Industry Bank (EIB). Valdepeñas said EIB is “one of the cards”, noting that “there are some legal issues to be resolved before we can move forward.”

UnionBank has expressed interest in acquiring EIB since last year in a bid to grow the bank ahead of Asean integration and with the passage into law of a bill that allows more foreign banks to compete in the local market.

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