AUB Sustains Momentum with 34% Net Income Growth

​More robust lending activities and digital partnerships enabled Asia United Bank (AUB) and its subsidiaries to sustain a streak of double-digit net income growth in 17 straight quarters since the COVID-19 pandemic in 2020.

In the first three months of the year, the banking group saw its consolidated net income jump a 34% to P3.1 billion from P2.3 billion a year ago. This translated to a return on equity (ROE) of 22.3% and a return on assets (ROA) of 3.4%, breaching year-ago ratios of 20.0% and 2.8%, respectively.

The much-improved profitability was attributed to a 34% expansion in its loan portfolio to P252.6 billion from P188.4 billion a year ago. Asset quality continued to improve despite the loan growth, with its nonperforming loan (NPL) ratio at 0.35% from the previous year’s 0.47%, among the lowest in the industry.

AUB also further reduced its loan loss provision by 15% to P66.0 million from P78.0 million in the same quarter last year. It remains sufficiently covered, with an NPL coverage ratio at 119.8%, higher than previous year’s 116.7%.

Interest expense on deposits increased 11% year-on-year as total deposits rose by 9% to P308.1 billion. The higher interest expense was offset by a 9% increase in interest income to P5.6 billion. This resulted to a net interest income of P4.3 billion, 8% higher versus the year ago level, and a net interest margin of 5.1%. The bank’s low-cost deposit (current account/savings account or CASA) remains its primary source of funding, accounting for 69% of its total deposits.

Non-interest income grew 81% to P1.3 billion as other non-interest bearing business activities such as trading and securities gains, foreign exchange gains, miscellaneous income and service charges and other fees from other operating activities such as credit cards, AUB PayMate, HelloMoney, remittance business, trust and other branch-related transactions grew.

Operating expenses rose by 9% to P1.8 billion, mainly due to higher compensation, capital expenditures, and business growth-related expenses. Thanks to its heavy reliance on digital partnerships, the bank continues to exhibit efficient resource management in its business generation as evidenced by its 32.6% cost-to-income ratio.

Total assets grew 11% to P384 billion while total equity increased 22% to P61.8 billion, mainly from better operating results. The bank is adequately capitalized with capital ratios well above regulatory requirements. It has an indicative Common Equity Tier 1 Ratio of 17.49% and a capital adequacy ratio of 18.19%.

“We have managed to sustain the growth in our profitability since the pandemic, thanks to our robust core business and digital partnerships. While we are confident of our performance, we remain cautiously optimistic about the near-term outlook for the global economy due to the ongoing trade wars, the potential disruption in global supply chains, the projected slowdown in many major economies, and the growing geopolitical tension in some parts of the world,” said AUB President Manuel A. Gomez. “We will continue to adjust our sails to navigate this global turmoil and remain agile.”