Union Bank Of The Philippines · PSE:UBP
Union Bank Of The Philippines — Q1 2023 Earnings Presentation
25 slides from Union Bank Of The Philippines's earnings presentation, May 2, 2023
Slide 1: First Quarter 2023 Financial & Operating Results
First Quarter 2023 Financial & Operating Results Tuesday, May 2, 2023 1
Slide 2: Analysts' Briefing May 2, 2023
Briefing May 2, 2023 3:00 PM PHT UnionBank Stig) 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 Dmi Lozano Chief Financial Officer 1. Financial Performance Johnson Sia Treasurer and Head of Global Markets 2. Macroeconomic and Industry Outlook Carlo Eñanosa Head of Corporate Planning and Investor Relations 3. Strategy Updates 5
Slide 5: Financial Performance
Financial Performance 1Q2023 7
Slide 6: UnionBank 1Q2023 net income at P3.4 billion, up 30% YoY
UnionBank 1Q2023 net income at P3.4 billion, up 30% YoY Recurring Revenues Recurring Revenues (in P Bn) Net Income Net Income (In P Bn) (in PHP Bn) (in PHP Bn) Strong growth in core recurring Net Interest Income Fees & Other Income 3.4 revenues due to: 15.7 o P4.7 billion contribution of the acquire
Slide 7: Net interest income up on higher margins and earning assets growth
Net interest income up on higher margins and earning assets growth Net NetInterest Income Interest Income Net NetInterest Margin Interest Margin Earning Assets Earning Assets (in (inPHP Bn) Php Bn) (ADB in (ADB in Php PHPBn) Bn) Yield Cost NIM Liquid Earning Assets Securities Current Loans Others 1,
Slide 8: Consumer loans lead portfolio growth
Consumer loans lead portfolio growth Gross Loan Portfolio Mar-22 Mar-23 Variance %Growth (OS in PHP Bn) CSB, UD & Other Subs Corporate Commercial Retail (Parent) Corporate 123 128 5 4% Middle Market and SME 81 85 4 5% 490 Consumer 71 178 107 150% +150% 43% Credit Card (Legacy) 8 11 3 35% 178 Credit
Slide 9: Cash management and retail customer growth drive CASA growth
Cash management and retail customer growth drive CASA growth Total Deposits CASA Deposits (ADB in PHP Bn) (ADB in PHP Bn) 689 500 62% 60% 50% 87 450 417 564 22% 400 19% +51% 349 73 0% 94 350 45 300 -50% 250 602 200 +26% -100% 470 343 150 305 100 -150% 50 0 -200% Mar-22 Mar-23 Mar-22 Mar-23 Peso FCDU
Slide 10: Fees from customer growth and digital transactions boost non-interest income
Fees from customer growth and digital transactions boost non-interest income Non-Interest Income Non-Interest Income Non-Interest Income,Income Non-Interest Net of Trading (in PHP Bn) (Net (in of PHPTrading) Bn) Service Charges, Fees & Comm Other Income Service Charges, Fees & Comm Other Income Secu
Slide 11: Core OPEX growth remains manageable
Core OPEX growth remains manageable Operating Expenses Operating Expenses (inPHP (in Php Bn) Bn) (in PHP million) Mar-22 Mar-23 Var. Growth 10.1 Total OPEX 6,016 10,070 4,054 67% 67% One-offs and New Businesses -116 3,095 6.0 Net of Adjustments 6,133 6,975 843 14% Manpower and Controllable 4,045 4,4
Slide 12: Capital ratios provide room for growth
Capital ratios provide room for growth CAR CAR CET1 CET1 22.7% 20.6% 16.9% 13.7% 15.9% 14.9% 14.2% 13.0% 11.9% 11.3% 10% regulatory 8.5% minimum regulatory minimum Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Preliminary Preliminary
Slide 13: Our key ratios will bounce back as we fully integrate new businesses
Our key ratios will bounce back as we fully integrate new businesses Cost-to-Income Ratio Cost-to-Income Ratio Return on Return on Equity Equity (Beg) (Beg) 62.5% 58.8% 9.2% 9.1% Mar-22 Mar-23 Mar-22 Mar-23 Return on Ave. Equity: 9.5% (2022) vs. 8.4% (2023)
Slide 14: Macroeconomic and Industry Outlook
Macroeconomic and Industry Outlook 16
Slide 15: We see rates stabilizing in 2H2023 as economic recovery continues
We see rates stabilizing in 2H2023 as economic recovery continues Rising leisure spending indicates rebounding We expect 6.50% RRP rate for May-Dec 2023 consumer demand despite inflation UBP Credit Card Billings Inflation and RRP Rates (in PHP b) Jan-23, 8.7% Dining, Shopping and Travel Spending May
Slide 16: Futures market expecting one more hike, then cuts by end of the year
Futures market expecting one more hike, then 3 cuts by end of the year Fed Funds Futures 5.032 5.063 4.988 4.825 4.829 4.605 4.383 4.148 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Implied Rate
Slide 17: No futures market for the Philippines; flattening curve
No futures market for the Philippines; Flattening curve shows market is pricing in similar movement Peak Start of year Current Key BSP Policy Rate rate
Slide 18: Strategy Updates
T:) UnionBank Strategy Updates
Slide 19: Transformation Roadmap
Go for Gold 2025 Largest and Most Profitable Retail Bank by 2025 Transformation Roadmap 2016-2018 2019 2021 2022 Digital Transformation A UBX Open Finance Platform B Deal of the Decade C Launch of UnionDigital D Phase 1. Build the Core RichRich Upper Income Infrastructure & Organization Culture Uppe
Slide 20: We continue to scale up the retail banking base
A We continue to scale up the retail banking base Phase 1 Phase 2 Phase 3 Build the Core Launch Digital Channels Rollout and Commercialization Customers Loan Portfolio (in millions) (in PHP b) 12 90.9 11 81.7 9 7 60.1 47.1 50.6 5 Infrastructure & Organizational Culture 2019 2020 2021 2022 1Q2023 201
Slide 21: UBX starts the year strong
B UBX starts the year strong UBX Open Finance Platform MSME lending marketplace (open to other lenders like banks and fintechs) 82k MSMEs P1 billion P35m Q1 Revenue community Q1 loan disbursements Fast-growing agency banking network Financial P25m ~4K+ Network on the Q1 Revenue Mobile ATM Agents Blo
Slide 22: Legacy Citi leading indicators are ahead of plan
C Legacy Citi leading indicators are ahead of plan Deal of the Decade Record-high acquisition in cards and loans 17,000 ave. clients per month New Cards Acquisition New To Bank Ave Clients per Month (in thousands) 51 30 17 10 4Q2019 1Q2023 Citi loans (in Php B) Cards Personal Loans Timeline 76.9 78.
Slide 23: UnionDigital is already profitable
D UnionDigital is already profitable 6/6 UD taps a large underserved population Rich Upper Income months to months to build turn profitable Upper middle Target segment Loans (in PHP b) Middle income 9.2 7.9 Lower middle income 6.3 5.7 Lower income / minimum wage earners Dec-22 Jan-23 Feb-23 Mar-23
Slide 24: Summary
SUMMARY 1 The Bank has solid recurring income growth coming from net interest margins and fees The acquired Citi consumer business is outperforming our expectations. 2 Full synergy impact will be realized in 2024. 3 All UnionBank subsidiaries are now profitable. 4 We expect to continue growth trajec
Slide 25: Thank You!
Thank You! 27
Union Bank of the Philippines — Q1 2023 Earnings Presentation on 6ix