Union Bank Of The Philippines · PSE:UBP
Union Bank Of The Philippines — Q2 2023 Earnings Presentation
34 slides from Union Bank Of The Philippines's earnings presentation, Aug 1, 2023
Slide 1: Second Quarter 2023 Financial & Operating Results
Second Quarter 2023 Financial & Operating Results Tuesday, August 1, 2023
Slide 2: Analysts' Briefing, August 1, 2023
Briefing August 1, 2023 2:30 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 2. Financial Performance Dmi Lozano Chief Financial Officer 3. Strategy Updates – Consumer Banking Manoj Varma Head of Consumer Banking
Slide 5: Macroeconomic and Industry Outlook
Macroeconomic and Industry Outlook
Slide 6: Fed hiked 25bps to 5.25-5.50% as expected, left door open for more
Fed hiked 25bps to 5.25-5.50% as expected, left door open for more • Powell said further hikes will be data-dependent • “It's certainly possible the committee will move in September but it's possible that we choose to hold“ • The chair acknowledged the drop in inflation but noted that core prices re
Slide 7: Interest Rate Path (End 2022 vs Now)
Interest Rate Path (End 2022 vs Now) Latest dots Start of year dots Latest dots Start of year dots Higher for longer evident, rate cut projections push back
Slide 8: Interest differential between the US and PH narrowed to 75bps
Interest differential between the US and PH narrowed to 75bps coming from 175bps for most of the pandemic “100bp comfort level” New IRD target 75bps
Slide 9: USD Strength has dissipated
USD Strength has dissipated CNH PHP DXY • CNH finally joined the club lower this month as PBOC recent CNY fixes indicate a downward bias as Beijing pledges to support growth by likely cutting rates further
Slide 10: Philippine peso remains within a narrow trading range
Philippine peso remains within a narrow trading range 56.40 54.40
Slide 11: BSP ready to resume rate hikes if data warrants
BSP ready to resume rate hikes if data warrants • BSP Governor Eli Remolona signaled further monetary policy tightening is still on the table for the economy • New Governor - significant policy continuity, but early comments were slightly hawkish than Medalla • “Premature” to talk about cutting the
Slide 12: BVAL Curve: YTD lows vs. current
BVAL Curve: YTD lows vs. current PESO GS BVAL RATES Tenor 5/15/23 7/28/23 Change 3M 6.0730 5.6997 -0.37 6M 6.0630 5.9347 -0.13 1Y 5.9840 6.1188 0.13 BSP policy rate 6.25% 2Y 5.8750 6.2067 0.33 3Y 5.8040 6.2451 0.44 4Y 5.7640 6.2670 0.50 5Y 5.7460 6.2805 0.53 7Y 5.7580 6.3173 0.56 10Y 5.8140 6.3562 0
Slide 13: System liquidity ample to support growth; RRR cut to 9.5%
System liquidity ample to support growth; RRR cut to 9.5% (to replace MSME pandemic-era concession) and further cuts expected once monetary policy turns BS P Bills 467.43 Bn O DF 299.57 Bn TDF 317.67 Bn RRP 305.00 Bn 1,389.67 Bn
Slide 14: Financial Performance
Financial Performance 1H/2Q 2023
Slide 15: UnionBank 1H2023 net income at P6.4 bn
UnionBank 1H2023 net income at P6.4 bn Net income growth mainly driven by core recurring income, but offset by one-time integration cost of acquired Citi portfolio Net interest income is higher due to earning asset growth and NIM expansion Fee and other income more than doubled due to increase in cu
Slide 16: YTD NII up 41% due to strong margins and earning assets
YTD NII up 41% due to strong margins and earning assets Net Interest Income Net Interest Margin Cost NIM Yield (in PHP Bn) 7.9% 7.9% YoY 6.5% 🔺 231 bps Interest Income Interest Expense Net Interest Income 6.2% 5.7% 5.6% YoY 🔺 40% YoY 36.5 5.2% 5.2% 🔺 60 bps 🔺 76% 🔺 8% QoQ 4.9% 5.0% 4.7% 4.6%…
Slide 17: Diversified consumer loans post double-digit growth
Diversified consumer loans post double-digit growth Gross Loans Loan Mix Industry’s Consumer Loans – 19% (OSB in PHP Bn) (%) Based on BSP data as of March 2023 Corporate Commercial Retail (Parent) CSB, UD & Other Subs 🔺 43% YoY 24%, Mortgage 28%, 🔺 6% QoQ Salary 45%, 55%, Loans Corporate and 30%…
Slide 18: 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% 🔺 22% YoY 62% 63% 60% 60% 🔺 1% QoQ 58% 58% 60% 700 689 699 600 🔺 16% YoY 40% YoY 621 87 90 🔺 4% 🔻 0% QoQ 598 564 573 20%…
Slide 19: Customer transactions driving fee-income
Customer transactions driving fee-income Non-Interest Income YTD Fee and Other Income (in PHP Bn) (in PHP Bn) Fee and Other Income Gain on Sale/Foreclosure Securities Trading Gains 1H22 1H23 🔺 2.4x YoY YoY 🔺 27% QoQ 10.5 🔺 2.3x 0.8 🔺 5.6x Customer Transactions 71%, 2.8 75%, 6.6 0.8 🔺 1% UD…
Slide 20: OPEX growth mainly due to new businesses and one-time cost
OPEX growth mainly due to new businesses and one-time cost Operating Expenses Cost-to-Income Ratio (in PHP Bn) (%) Core OPEX New Businesses Integration and One-offs 63% CIR 63% 🔺 97% YoY 60% 🔺 17% YoY YoY (-) Integration and 21.8 🔺 82% 59% 2% 6% 7% One-offs 57% 2.4 1% 56% 5.0 11.7 12.0 10.9 0.1…
Slide 21: Consumer NPL Ratios are in line with industry average
Consumer NPL Ratios are in line with industry average NPL Ratio NPL Ratio (Consumer) UnionBank Loan Mix UBP Industry UBP Industry 9.0% 8.1% 7.2% 6.5% 6.4% 5.2% 4.9% 5.0% 7.7% 7.2% Corporate Consumer, 4.4% 4.4% 4.8% and 55% 5.7% 5.7% 6.1% 6.3% Commercial, 45% 4.4% 3.8% 3.6% 3.4% 3.5% 1Q22 2Q22 3Q22 4
Slide 22: Capital ratios provide room for growth
Capital ratios provide room for growth Capital Adequacy Ratio (CAR) Common Equity Tier 1 Capital Ratio (CET1) 22.7% 20.6% 16.9% 13.7% 15.5% 16.2% 14.9% 14.5% 14.2% 11.9% 13.0% 11.3% 10% regulatory 8.5% minimum regulatory minimum 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Preliminary
Slide 23: Strategy Updates: Consumer Banking
Strategy Updates Consumer Banking
Slide 24: Where we were on Legal Day
Where we were on Legal Day 1 UnionBank of the Philippines became the legal owner of the Citi Consumer Business (operating under TSA) on August 1, 2022 >1,500 P99.4b P69.5b P85.4b Employees including Total Assets Loans Asset Under Management all senior leadership P63.8b 89% <1% 0% Attrition Attrition
Slide 25: The Citi Integration: Off to a great start
The Citi Integration: Off to a great start 1,250 23.50 87.70 1,200 22.08 HIGHLIGHTS 1,200 22.50 23% 1,150 13% 21.50 11% 71.48 ✓ Integration activities are 1,100 1,065 20.50 19.88 1,050 19.50 underway and progressing well 1,000 18.50 950 17.50 60.00 ✓ Business momentum is strong; Aug'22 2Q'23 Aug'22
Slide 26: Continued focus on our clients & on risk and controls
Continued focus on our clients & on risk and controls 74.4 Credit Cards 69.3 Wealth Management 82.6 Digital Highest Active Credit Card Growth Highest Consumer Credit Payment Volume Growth Net Promoter Score Highest Consumer Credit Cards Growth Top Consumer Debit Card Issuer 100% of issues are resolv
Slide 27: Full integration into UBP within reach; Consumer Business focused on growth
Full integration into UBP within reach; Consumer Business now laser-focused on growth objectives Complete migration of Citi legacy Leverage greater Aboitiz accounts into UBP systems and network to deepen our Onboard new partners to products relationship with our clients grow our business with Contin
Slide 28: CEO quote: We won't let you down
"…We won’t let you down. We’re going to offer something that at the minimum is what you’re enjoying today, if not better. And that’s a promise.” Edwin R. Bautista President & Chief Executive Officer UnionBank of the Philippines 29
Slide 29: Our 2-Pronged Strategy: Citi
OUR 2-PRONGED STRATEGY: HARNESS THE STRENGTHS OF 2 POWER BRANDS • Digital Banking Trailblazer • Global Banking Innovator • Prime mover of “TechUp Pilipinas” • Financial Solutions Innovator Citi • Wealth Management Expert • Best-in-Class Customer Service ELEVATE THE EXPERIENCE, NOT JUST INTEGRATE
Slide 30: Elevate your wealth to unbelievable heights.
Elevate your wealth to unbelievable heights. WHAT’S NEW Real-time digital Ability to buy USD Real-time local online account opening at market leading rates fund transfers via on mobile InstaPay WHAT’S UPGRADED Expanding FREE Customizable Php500K Access to 198 branches withdrawals to all ATMs PESOnet
Slide 31: With Unbelievable Benefits, U Experience More.
With Unbelievable Benefits, U Experience More. WHAT’S NEW Credit Cards Our first fully Metal Card is here with Pay with points UnionBank Reserve anywhere in the world. UnionBank Reserve UnionBank Miles+ Visa Infinite / Mastercard World Elite Visa Signature / Mastercard World Shop with points instant
Slide 32: Unbelievable? Believe it!
OUR STORY: Unbelievable? Believe it!
Slide 33: Key Conclusion
Key Conclusion Citi integration is on track and progressing well Business momentum is strong and ahead of plan, despite integration costs Primary focus is to complete the migration and implement growth initiatives and synergies The Consumer Business is driving an increasing portion of the overall ba
Slide 34: Thank You!
Thank You!
Union Bank of the Philippines — Q2 2023 Earnings Presentation on 6ix