IN a meeting with analysts and investors over the weekend, UnionBank chairman and chief executive officer Justo Ortiz said the bank is doing well and is in a position to close the year with great results.

“We are profiting from our core business strategy which, coupled with our unwavering commitment to asset quality and effective risk management, will position the bank well for the remainder of 2008, Ortiz said. 

“Notwithstanding the prevailing earnings anxiety in the domestic banking sector, the bank unravelled its fundamental core business resilience which underlines what sustainable and responsive banking requires to deflect the impact of cyclical risks on our bottom lines,” he added

UnionBank’s focus on lending was clearly illustrated in the 79-percent increase in its credit to corporations in the first semester of this year, particularly those that typically belong to electricity, gas and water services and real-estate development. 

Similarly, loans to consumers rose by an equally significant 18 percent. Notable also of UnionBank’s interim performance was its strategy to use low-cost deposits to fund an increase in its lending activity, as indicated by a marked decline in its average deposit rate of 2.6 percent in the first half from 3.2 percent a year earlier. 

The bank’s cost efficiencies helped widen its net interest margin to 4.3 percent in the first half from 3.3 percent.  Net interest income, consequently, improved by 13 percent or P316 million in the same comparable period, exceeding expectations.

After exhibiting two consecutive quarters of robust developments in its lending business and interest income position, UnionBank was cited by investment house ATR KimEng Securities Inc. for pursuing a growth strategy anchored on its fundamental source of strength. 

With the upswing in net loans accelerating from 18 percent year-on-year in the first quarter to 39 percent in the second quarter, ATR KimEng credited UnionBank’s core business strategy, which it determined will enable the expansion of the bank’s recurring income base and dispel perceptions pointing to its heavy dependence on trading income to maintain profitability.

“While two quarters obviously do not establish a long-term trend, UnionBank is heading in the right direction,” according to the study.

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IN a meeting with analysts and investors over the weekend, UnionBank chairman and chief executive officer Justo Ortiz said the bank is doing well and is in a position to close the year with great results.

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