UnionBank raises loan loss provisions by 750% amid COVID-19

Union Bank of the Philippines (UnionBank) significantly increased its loan loss provisions by 750% to P1.3 billion in the first quarter of 2020 as a precautionary measure against potential financial losses stemming from the COVID-19 pandemic and lockdown.

Despite the heightened provisions, the bank reported a 22% year-on-year increase in net income, reaching P2.6 billion by the end of March.

UnionBank's revenues also saw a substantial rise of over 37% to P9.5 billion, primarily driven by a 47% surge in net interest income to P6.8 billion.

The bank's CFO, Jose Emmanuel Hilado, stated that setting aside higher provisions was a prudent step given the uncertainties of the health crisis.

Hilado also emphasized that the bank's strong financial performance and capital base would provide a buffer against the economic impact of the enhanced community quarantine.

UnionBank president and CEO Edwin Bautista affirmed the bank's commitment to support its clients and the economy by ensuring liquidity and financial access during the crisis, keeping branches open and digital channels accessible.

Customer loans expanded by 24% to P391.8 billion in the first three months, propelled by growth in commercial lending, consumer loans, and SME banking.

The bank's margins improved significantly due to lower funding costs, resulting from increased CASA deposits and policy rate cuts by the Bangko Sentral ng Pilipinas (BSP).