AUB Group’s net profit surges by 70% in Q3

ASIA United Bank Corp. (AUB) and its subsidiaries saw their consolidated net income climb by 70% in the third quarter amid higher earnings from its core businesses.

AUB Group booked a net income of P1.7 billion last quarter, 70% higher than the P998.3 million booked in the same period in 2021, based on its quarterly report disclosed to the local bourse.

This brought its net profit for the first nine months to P4.6 billion, up 57% from the P2.9 billion a year prior, which it noted already surpassed its pre-pandemic performance.

The bank’s nine-month performance translated to a return on assets of 1.9%, up from 1.3% the year prior, and a return on equity of 16.4%, rising from 10.8%. Its cost-to-income ratio in the period was at 38.6%, better than 44% a year ago.

“Since AUB started at the height of the 1997 financial crisis, it has consistently been among the top five publicly listed local banks in the country that have posted healthy profitability ratios. We are extremely pleased to have beaten our pre-pandemic performance as we celebrate our 25th anniversary,” AUB President Manuel A. Gomez said in the statement.

“We will remain prudent, vigilant, and agile, even as we continue to be confident of ending 2022 with a stronger financial position,” Mr. Gomez said, noting the bank remains watchful of risks, including inflationary pressures, higher interest rates, the peso’s depreciation against the dollar, and geopolitical tensions.

AUB’s net interest income rose by 24% to P3.5 billion in the third quarter from P2.8 billion a year prior, backed by better earnings from loans and trading and investment securities.

Interest income from loans and receivables went up by 9% to P2.8 billion as it booked higher loans, while earnings from trading and investment securities more than doubled (up 110%) to P1.1 billion on reinvestment into higher yielding securities.

Meanwhile, interest expense increased by 12% to P492.7 million.

For the first nine months, net interest income increased by 14% to P93 billion.

Net interest margin rose to 4.1% from 3.8%.

On the other hand, AUB Group’s other operating income climbed by 38% to P588.7 million in the quarter amid higher gains from trading and securities, service charges, fees and commissions, and foreign exchange.

Trading and securities gains surged 101% to P75.5 million amid favorable market conditions.

“The bank took profit on a handful of securities to secure gains during this volatile year,” it said.

Foreign exchange gains increased by 61% to P138.7 million, while earnings from service charges, fees and commissions rose 17% to P267.8 million. Miscellaneous income also grew by 62% to P76.8 million.

For the nine months ended Sept. 30, the group’s non-interest income grew by 40% to P1.6 billion.

AUB Group’s total operating expenses increased by 6% to P2 billion last quarter, bringing the nine-month total to P5.3 billion, down 5% year on year.

Provisions for losses inched up to P508.7 million from P507.3 million in the third quarter, with the nine-month total at P4.2 billion, also up by 3% from the year prior.

The bank’s loans and receivables increased by 7% to P176.6 billion as of Sept. 30 “as corporate clients with expansion projects held in abeyance during pandemic resumed implementation.”

“Corporate clients also started to avail loan in anticipation of rising interest rates. Consumer loans also increased from stable housing demand, resumption of motor vehicle purchases and increased utilization of salary loans,” the bank said.

AUB Group’s nonperforming loan (NPL) ratio went down to 1.54% at end-September from 1.98% a year ago. NPL coverage ratio rose to 89.1% from 82.6%.

Meanwhile, deposits were flat at P262.3 billion as an increase in demand and savings deposits was offset by a decrease in time deposits.

The group’s total assets inched up to P317.8 billion as of Sept. 30 from P317.8 billion. Equity also increased by 3% to P38 billion.

The bank’s common equity Tier 1 ratio stood at 14.04% as of September, down from 15.95% a year prior, while capital adequacy ratio was at 14.64%, lower than 16.59% a year ago. Still, both remained above regulatory requirements.

AUB Group had 258 branches and its parent bank had 201 automated teller machines as of Sept. 30.

The bank’s shares declined by 3.74% or P1.55 to close at P39.90 apiece on Wednesday. — BVR