Union Bank Of The Philippines · PSE:UBP

Union Bank Of The Philippines — 1H 2024 Earnings Presentation

26 slides from Union Bank Of The Philippines's earnings presentation, Aug 2, 2024

  1. Slide 1: Briefing, 2 August 2024

    Briefing 2 August 2024 2:30 PM PHT UnionBank } 2} 2025 Together we are building the PH's first techglomerate

  2. Slide 2: 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

  3. Slide 3: Agenda

    Agenda Dominic Banal 1. Macroeconomic and Industry Outlook Global Markets - Trading Head 2. Financial Performance Dmi Lozano Chief Financial Officer

  4. Slide 4: Macroeconomic and Industry Outlook

    Macroeconomic and Industry Outlook

  5. Slide 5: BSP on track for August rate cut

    BSP on track for August 15 rate cut • DOF’s Recto says he is open to a cut in the policy rate next month if such move is backed by central bank Governor Eli Remolona o PH on track to hit 2024 fiscal target o “I hope Philippines 2Q GDP growth is 6%” • BSP kept rates at 6.5%, latest comments remain do

  6. Slide 6: June inflation 3.7% y/y, down from 3.9% y/y previous

    June inflation 3.7% y/y, down from 3.9% y/y previous 3.7% 3.1% • August rate cut more feasible with lower June inflation – BSP Governor Eli Remolona • Inflation likely have peaked, policy rate cut “soon” – Finance Secretary Ralph Recto

  7. Slide 7: Relief from base effects in Aug/Sep as 2.2% rolls off

    Relief from base effects in Aug/Sep as 2.2% rolls off vs total of -0.1% in Feb-July

  8. Slide 8: BVAL curve lower by around 35bps

    BVAL curve lower by around 35bps PESO GS BVAL RATES MoM YTD Tenor End 2023 6/28/24 7/22/24 Change Change 3M 5.9320 6.0860 5.7562 -0.33 -0.18 6M 5.9350 6.1430 5.9934 -0.15 0.06 1Y 5.9290 6.1890 6.0884 -0.10 0.16 2Y 5.9200 6.2600 6.0706 -0.19 0.15 3Y 5.9090 6.3180 6.1244 -0.19 0.22 4Y 5.9140 6.3750 6.

  9. Slide 9: Regional currencies still down YTD despite recent dollar weakness

    Regional currencies still down YTD despite recent dollar weakness Dollar slumped in July

  10. Slide 10: USDPHP retreats from historical highs; further clearing way for cut

    USDPHP retreats from historical highs; Further clearing way for cut • USD/PHP dropped on the back of broad dollar weakness, local bond inflows, and effective BSP intervention

  11. Slide 11: FOMC keeps rates steady at 5.25% - 5.50%, signals cuts is nearer

    FOMC keeps rates steady at 5.25% - 5.50%, signals cuts is nearer • Powell says Fed could cut rates ‘as soon as’ September meeting o Jerome Powell said a rate cut could come as soon as September and officials said they’re watching risks on both sides of the Fed’s mandate, putting jobs into focus alon

  12. Slide 12: WIRP rate cut projections pricing in 2-3 cuts for the year

    WIRP rate cut projections pricing in 2-3 cuts for the year Latest WIRP – August 01

  13. Slide 13: UST yields trending lower

    UST yields trending lower MoM YTD End-23 28-Jun 01-Aug Change Change 2Y 4.2499 4.7535 4.2781 -0.48 0.03 5Y 3.8471 4.3765 3.9374 -0.44 0.09 10Y 3.8791 4.3961 4.0507 -0.35 0.17 30Y 4.0282 4.5583 4.3200 -0.24 0.29

  14. Slide 14: Financial Performance 1H 2024

    Financial Performance 1H 2024

  15. Slide 15: Strong growth in customers & revenues

    Strong growth in customers & revenues Customer Growth (in #, Mn) Net Interest Margin 15.2 5.7% 13.9 5.5% 13.2 5.2% 11.8 4.8% 4.5% 4.6% 8.9 4.2% 7.1 3.7% Industry 15% 4.7 55 bps 2019 2020 2021 2022 2023 1H23 1H24 2019 2020 2021 2022 2023 1H23 1H24 Net Revenues (in PHP, Bn) Net Revenues (net of tradin

  16. Slide 16: UnionBank 1H24 net income at P5 bn

    UnionBank 1H24 net income at P5 bn UnionBank’s retail business remains strong, driving the group’s topline revenues. The parent bank’s net income is higher year-on-year with better net interest margins (NIMs), higher proportion of consumer business, and increased customer transactions. The decrease

  17. Slide 17: NII up 15% due to higher margins

    NII up 15% due to higher margins Net Interest Income (in PHP Bn) Net Interest Margin YoY Interest Income Interest Expense Net Interest Income Cost NIM Yield 8.1% 8.3% 8.5% 8.5% 63bps YoY 7.9% 5.2% 5.3% 5.5% 5.7% 5.7% 55bps 40.9 12% 4% QoQ 36.5 2.7% 2.8% 2.8% 2.8% 2.8% 8bps 27.5 15% 2Q23 3Q23 4Q23 1Q

  18. Slide 18: Loan growth driven by credit cards and CitySavings

    Loan growth driven by credit cards and CitySavings Gross Loans (in PHP Bn) Loan Mix Institutional Retail (Parent) CSB, UD & Other Subs Industry’s Consumer Loans – 21% Based on Q1-24 BSP data 0% YoY 1% QoQ 520 531 523 524 519 491 YoY 109 116 115 117 119 100 9% 176 182 187 190 171 189 7% 220 234 234 2

  19. Slide 19: Steady growth in CASA

    Steady growth in CASA Total Deposits (Consolidated) CASA Deposits (Consolidated) (OSB in PHP Bn) (OSB in PHP Bn) Peso FCDU Peso FCDU Share of CASA to Total Deposits 4% YoY 800 80% 4% QoQ 61% 60% 62% 64% 59% 56% 725 713 700 60% 693 693 692 666 YoY 4% YoY 101 96 40% 89 98 9% 600 144 118 1% QoQ 20% 500

  20. Slide 20: Parent bank customer transactions driving fee income

    Parent bank customer transactions driving fee income Non-Interest Income YTD Fees (in PHP Bn) (in PHP Bn) Fees Trading Income 1H23 1H24 Parent 10.5 YoY Customer 58%, 5.7 69%, 6.6 Transactions 0.8 9.8 6% 0.3 61% CSB 14%, 0.2 5%, 0.3 0% 5.9 QoQ UD 10%, 1.2 11%, 0.2 0.4 5.0 4.9 4.9 4.6 0.0 0.2 0.1 9.7

  21. Slide 21: OPEX growth mainly due to business growth

    OPEX growth mainly due to business growth Operating Expenses Cost-to-Income Ratio (in PHP Bn) (%) Core Opex Volume Related One-offs 64% 63% 63% 63% 60% 7% YoY 7% 7% 6% 58% CIR 21.8 21.6 2.4 1.3 45% 7% Integration Cost 4% and One-offs 6.1 7.1 16% 5% QoQ 11.7 11.7 11.4 11.1 10.1 10.5 1.4 1.2 1.3 1.2 0

  22. Slide 22: Credit cost increase is due to additional reserves in UD

    Credit cost increase is due to additional reserves in UD Credit Cost Loan Mix Parent Bank & Other Subsidiaries UnionDigital UnionBank Consumer Loan Mix 77 bps 3.5% Consumer, Parent, 36% Institutional, 2.7% 1.1% 41% 59% CSB, 21% 0.4% UD, 2% vs 2.3% 2.4% Industry Institutional, FY23 Annualized 79% Con

  23. Slide 23: NPL ratio reflect growing consumer portfolio

    NPL ratio reflect growing consumer portfolio NPL Ratio NPL Ratio (Consumer) UBP Industry UBP Group Industry 8.6% 8.7% 5.9% 7.1% 7.4% 6.3% 7.2% 14 bps 5.0% 5.5% 6.8% 4.8% 6.4% 6.3% Vs Q1-24 5.8% 5.8% 5.8% Parent Consumer Industry NPL Ratio 6.1% 6.3% 6.0% 3.5% 3.6% 3.6% 3.5% 3.6% 3.6% 1Q23 2Q23 3Q23 4

  24. Slide 24: 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) 15.8% 16.8% 16.2% 15.5% 15.7% 15.2% 14.5% 14.0% 15.1% 14.7% 13.9% 13.2% 13.9% 13.9% 13.4% 13.4% 13.2% 12.4% 10% regulatory 8.5% 8

  25. Slide 25: Summary

    Summary Key Takeaways Outlook Strong topline revenue driven by recurring income – NIMs up by 55bps, We expect to sustain new-to-bank customer acquisition rate, which will parent bank customer transactions up by 16%, customers up by 2M be an incremental source of recurring income OPEX have stabilized

  26. Slide 26: Thank You!

    Thank You!

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