Union Bank Of The Philippines · PSE:UBP
Union Bank Of The Philippines — FY2023 Earnings Presentation
33 slides from Union Bank Of The Philippines's earnings presentation, Mar 15, 2024
Slide 1: FY 2023 Financial & Operating Results
FY 2023 Financial & Operating Results Friday, March15, 2024
Slide 2: Briefing March 15, 2024
Briefing March 15, 2024 2:15 PM PHT UnionBank stg) et2028 Together we are building the PH's first techglomerate
Slide 3: Disclaimer
Disclaimer This presentation and the information contained herein (this "Presentation") are the sole and exclusive property of Aboitiz Equity Ventures (“AEV”) and shall only be used for the purpose intended herein and may not be used, published or redistributed without the prior written consent of A
Slide 4: Agenda
Agenda Johnson Sia 1. Macroeconomic and Industry Outlook Treasurer and Head of Global Markets Dmi Lozano 2. Financial Performance Chief Financial Officer
Slide 5: Macroeconomic and Industry Outlook
Macroeconomic and Industry Outlook
Slide 6: Policy expectations seemingly forming consensus around June cut
Policy expectations seemingly forming consensus around June cut • Start of 2024 started with heavily priced in expectations of as much as 6.7 cuts • Since then, rates have moved higher as rate cut expectations moderate o Fed speakers consistently trying to walk back cut expectations • “Not far” from
Slide 7: Market expecting 3.8 cuts vs. Fed Dots at 3.0 cuts
Market expecting 3.8 cuts vs. Fed Dots at 3.0 cuts
Slide 8: EOY 2024 at 4.625 (3 cuts) seemingly where market consensus will converge
EOY 2024 at 4.625 (3 cuts) seemingly where market consensus will converge
Slide 9: USTs off the highs but still 26-30 bps higher for the year
USTs off the highs but still 26-30 bps higher for the year
Slide 10: USD / Asian Sov Bond curve is inverted
USD / Asian Sov Bond curve is inverted
Slide 11: Risks: US Office REITS taking a beating
Risks: US Office REITS taking a beating
Slide 12: Risks: Oil resistance at 84 holds, OPEC+ extend supply cuts into 2Q
Risks: Oil resistance at 84 holds, OPEC+ extend supply cuts into 2Q
Slide 13: BSP may not cut rates soon, says Governor
BSP may not cut rates soon, says Governor • Remolona on cutting rates at a press briefing: o “I can’t say that we’re going to ease soon. But it’s unlikely that we will tighten some more but let’s see what the data says” o “Still too soon to say inflation comfortably within BSP’s 2%-4% goal o “The mo
Slide 14: February inflation rose 3.4%, ending 4-month decline
February inflation rose 3.4%, ending 4-month decline • PH CPI comes in at 3.4% vs 3.0% expected vs 2.8% previous • MoM at 0.6% vs 0.3% expected vs 0.6% previous
Slide 15: Transport prices rose 1.3% m/m driven by fuel prices
Transport prices rose 1.3% m/m driven by sequential increase in fuel prices while passenger transport inflation remain stable
Slide 16: Rice inflation highest since February 2009 at 23.7% y/y
Rice inflation highest since February 2009 at 23.7% y/y
Slide 17: GS curve below policy a reflection of cut expectations, system liquidity
GS curve below policy a reflection of cut expectations, system liquidity
Slide 18: System liquidity to net 1.89Tn after RTB and jumbo maturities
System liquidity to net 1.89Tn after RTB and jumbo maturities RTB 5-18 Issue Size 584.86 RTB Settlement Feb 28 -584.86 Swap 243.45 Total Outflow -341.41 Current System Liquidity 1,778 System Liquidity after RTB settlement 1,436 Maturities Mar 9-12 699 Swapped -243.45 Total Inflow 455.55 System Liqui
Slide 19: USD/PHP consolidating since start of the year
USD/PHP consolidating since start of the year • USD/PHP has been fairly stable for 2024 surprisingly without any BSP intervention. • Foreign Reserves up to $103.4B, + 0.87% m/m
Slide 20: Financial Performance FY 2023
Financial Performance FY 2023
Slide 21: UBP leader in digital metrics
UBP leader in digital metrics Highest NPS rating among banks conducted by BAIN Consulting1 Highly rated most downloaded banking APP in Google Playstore1 55% / 62% High Downloads 4.7 (12.6M) Brand Relationship Mobile App 1.6 Brand Channel Bank 1 (8.0M) UBP among the top in digital transactions Low Hi
Slide 22: Strong growth in customers & revenues
Strong growth in customers & revenues Customer Growth (in #, Mn) Retail Loans to Total Loans 13.9 58% 54% 11.8 40% 40% 8.9 35% 7.1 4.7 20% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 FY2023 Industry Net Revenues (in P, Mn) Net Interest Margin 70.8 5.5% 52.2 4.8% 4.5% 4.6% 42.1 45.1 36.7 4.0% 3
Slide 23: UnionBank FY2023 net income at P9.2 bn
UnionBank FY2023 net income at P9.2 bn Net income slowdown is driven by one-time integration cost of the acquired Citi business and other non-recurring costs. Business fundamentals remain strong and the Bank’s topline revenues continue to record robust growth. The diversified consumer portfolio and
Slide 24: NII up 34% due to higher margins and earning assets growth
NII up 34% due to higher margins and earning assets growth Net Interest Income Net Interest Margin Cost NIM Yield (in PHP Bn) 7.9% 7.9% 8.1% 8.3% YoY 212 bps 5.9% 6.2% Interest Income Interest Expense Net Interest Income 5.7% 5.6% YoY 5.2% 5.2% 5.3% 5.5% 73 bps 78.6 55% 4.8% 4.7% 4.6% 4.7% 32% 4Q23
Slide 25: Diversified consumer loans post double-digit growth
Diversified consumer loans post double-digit growth Gross Loans Loan Mix Industry’s Consumer Loans – 20% (OSB in PHP Bn) (%) Based on FY 2023 BSP data Corporate Commercial Retail (Parent) CSB, UD & Other Subs 10% YoY 2% QoQ 23%, Mortgage 42%, Corporate 34%, Consumer Loan and Commercial 32%, Salary P
Slide 26: Sustained CASA growth
Sustained CASA growth Total Deposits (Consolidated) CASA Deposits (Consolidated) (ADB in PHP Bn) (ADB in PHP Bn) Peso FCDU Peso FCDU Share of CASA to Total Deposits 800 80% 14% YoY 0% QoQ 62% 63% 63% 62% 60% 59% 59% 59% 60% 700 689 699 702 705 YoY 8% YoY 40% 600 621 87 90 93 94 4% 0% QoQ 594 564 573
Slide 27: Retail customer transactions driving fee income
Retail customer transactions driving fee income Non-Interest Income YTD Fees (in PHP Bn) (in PHP Bn) Fees Forex Gain on Sale/Foreclosure Securities Trading Gains FY22 FY23 YoY 37% 4Q23 vs 4Q22 18.8 41% 0.9 11x 34% QoQ Parent 71%, 73%, Customer 1.8 9% 6.8 10.1 Transactions 2.1 1% 13.3 1.7 UD, CSB, an
Slide 28: OPEX growth mainly due to one-time cost integration cost
OPEX growth mainly due to one-time cost integration cost Operating Expenses Cost-to-Income Ratio (in PHP Bn) (%) 63% 63% 63% CIR 63% Core OPEX New Businesses Integration and One-offs YoY 60% 6% 4Q23 vs 4Q22 44.9 43% 7% 7% 59% 6% 7% Integration Cost 3% QoQ 311% 57% 2% and One-offs 4.9 56% 1% 10.2 145
Slide 29: Credit cost inc. due to new businesses & select legacy corporate accounts
Credit cost inc. due to new businesses & select legacy corporate accounts Credit Cost Loan Mix Base Credit Cost New Businesses One-offs UnionBank Industry 175 bps 2.6% Corporate and Commercial, 80% 0.7% Consumer, 58% vs Corporate and Commercial, 42% Consumer, 1.2% 20% 0.8% 0.1% 0.2% 0.5% 0.7% Source
Slide 30: NPL ratio reflect growing consumer portfolio
NPL ratio reflect growing consumer portfolio NPL Ratio NPL Ratio (Consumer) UBP Industry UBP Industry 9.0% 5.3% 8.1% 7.2% 7.2% 43bps 6.3% 6.5% 6.4% 6.3% 6.8% Vs Industry 5.2% 4.9% 5.0% 5.5% 7.7% 7.2% 4.4% 4.4% 4.8% Parent Consumer 5.7% 5.7% 6.1% 6.3% 6.0% 5.8% NPL Ratio 4.3% 3.8% 3.6% 3.3% 3.5% 3.6%
Slide 31: Capital ratios above regulatory limits
Capital ratios above regulatory limits Capital Adequacy Ratio Group (CAR) Common Equity Tier 1 Capital Ratio Group (CET1) Common Equity Tier 1 Capital Ratio Parent (CET1) 22.1% 20.6% 22.7% 16.9% 14.9% 14.5% 14.0% 14.6% 16.2% 15.8% 15.7% 13.9% 13.9% 13.6% 13.7% 15.5% 15.3% 11.9% 13.4% 13.9% 13.2% 13.
Slide 32: Key Takeaways
Key Takeaways The bank is the leader in digital metrics, showing strong brand equity, substantial transaction 1 volumes and the most highly rated and most downloaded banking app in Google Playstore. The bank's top-line revenues experienced robust growth, driven by a strong growth in the 2 consumer s
Slide 33: Thank You!
Thank You!
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