Growing business volume, higher net interest margin, and better non-interest income enabled Asia United Bank (AUB) and its three subsidiaries to post P4.1 billion in consolidated net income in the first half of 2023 versus the same period a year ago. The 42% year-on-year (YOY) growth is among the highest so far reported among the country’s publicly listed privately owned universal banks.
The first-half income translated to higher profitability ratios, with Return on Equity (ROE) at 20.3% and Return on Assets (ROA) at 2.6%.
The group’s total operating income for the first half rose 30% YOY to P8.9 billion. This was on the back of a 28% increase in net interest income to P7.4 billion attributable to business volume growth and increased yields. Non-interest income rose 41% to P1.5 billion.
Total loan volume increased by 9% to P190.5 billion boosted by growth from corporate and consumer loans as confidence in the economy further improved in the first half. This resulted to a wider net interest margin of 5.0% from the previous year’s 3.8%. Strong contributions to the increases in service charges, fees and commissions, securities trading gains and foreign exchange gains came from AUB’s operating activities such as remittance, credit cards, trust, AUB PayMate, and trading businesses.
Total deposits stood at P269.9 billion, with low-cost CASA (current account/savings account) deposits comprising 72.5% of its total deposit base while its loan-to-deposit ratio stood at 70.57%.
Operating expenses for the first six months of the year rose 13% to P3.1 billion, primarily from the compensation increases and transaction volume-related expenses. Despite the increase, AUB’s cost-to-income ratio stood at 34.8%, lower than the previous year’s 40.0%.
While loans increased, the group was able to maintain its asset quality, with a non-performing loans (NPL) ratio of 0.85%, significantly below the banking industry’s overall NPL ratio of 3.46% in May according to the latest data released by the Bangko Sentral ng Pilipinas (BSP).
AUB recognized provisions of P952.0 million year-to-date, 86% above the P510.8 million in the same period last year, strengthening its NPL coverage ratio to 114.8% as of June 30, 2023, from 79.8% the previous year.
In the second quarter (April to June) of the year alone, the group booked a quarterly net income of P2.1 billion, up 32% year-on-year. Total operating income reached P4.4 billion for the quarter, up 26%, owing to the increase in both net interest income and non-interest income.
Total assets reached P327.7 billion as of the first half. Total equity was at P43.8 billion, with an indicative Common Equity Tier 1 Ratio of 15.42% and a Capital Adequacy Ratio of 16.00%, both well above regulatory requirements.
“While we see continuous improvement in consumer and business confidence, we remain on the lookout for potential headwinds as monetary policy remains hawkish. However, we see plenty of opportunities in greater collaboration within and outside the organization, particularly in digital transformation, and this gives us confidence in sustaining our gains,” said AUB President Manuel A. Gomez.
