October 16, 2013

Union Bank sees 10% profit growth this year

The Philippine Star quoted the president of Union Bank of the Philippines (UBP, Buy) as saying the bank hopes to grow its net income by at least 10% this year.

In 9M13, the bank booked substantial trading gains as bond yields continued to decline. However, the bank expects be some deceleration in trading gains moving forward due to the volatilities in the capital markets. Thus, it will focus on growing its consumer loans, particularly housing and auto loans.

Our take: The bank is taking the same focus as the other banks. Growing its consumer loan portfolio should be a key initiative for UBP given its leverage multiple of only 6x which provides a great scope for growth. If successful, UBP has room to its bank’s balance sheet spread towards to the industry average of 3.1%. - WealthSec