Union Bank’s income declining due to bad loans

Union Bank of the Philippines lost its net income to P11.6 billion last year, compared to P14 billion in 2019 due to higher “credit costs” or bad loans.

Union Bank on Monday said its credit costs swelled to P8.7 billion from P1.9 billion in 2019, as non-performing loans or “bad loans” increased to 5.1 percent from 3.1 percent, as businesses were disrupted by the COVID-19 pandemic.

Union Bank managed to book an “all-time high” revenues for 2020, reaching P42.1 billion compared to P38 billion a year ago on higher interest incomes and strong trading gains.

Net interest income on the back of higher savings deposits rose 29 percent to P28.7 billion, lower spending on funds due to lower interest rates, shifting to higher yielding loans, and strong trading gains valued at P8.9 billion.

“I am pleased with the Bank’s 2020 performance despite a challenging year … as we create new features in our digital channels and especially more of our underbound and blocked nationwide, we aim to increase our digital customer engagement to maintain our momentum.” Edwin R. Bautista, President and CEO of Union Bank.

Union Bank said 2 million customers transacted through their online channels in 2020, and is looking to increase digital transactions after opening more than 500,000 new accounts through its mobile app.