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MANILA - Union Bank of the Philippines is confident that its lending business would continue to grow by 30-35 percent on the back of a "very robust" expansion of the economy
Victor B. Valdepeñas, Unionbank president and chief operating officer, said the loan growth recorded in the first six months is sustainable, but would slow down towards the end of the year.
He said lending grew 20-25 percent, with mortgages registering the biggest expansion at 35 percent, followed by auto loans at 30 percent.
"If you just look at the skyline of Metro Manila, never have you seen in the history that you have seen as many equipment and as many high-rises, as many big projects coming out - horizontal, vertical and all over - that is replicated all over in other areas. There is a construction boom, particularly in the residential and mixed-development area. So that is a phenomenon that started years ago continues to be very, very strong," Valdepenas said.
The bank’s auto loans dipped earlier in the year but was already picking up, whereas credit cards will not be as strong as the other two consumer lending, he said.
Lending to corporations is seen to grow by 19-20 percent since Unionbank is participating in the public-private partnership program of the government, Valdepenas said, adding that the lender has not technical expertise on such projects.
Besides direct lending, Unionbank is also participating in capital-raising exercises, such as San Miguel Corp.’s preferred share sale. Valdepenas said the bank has taken up P6 billion of the P80-billion transaction, both for Unionbank's own account, as well as for its clients.
"So you see the growth is not only coming out of the traditional lending but also in the capital market. We're happy to participate in terms of funding viable projects of big corporations, corporations that are dominant players in the Philippine economy," he said.
Non-interest income would still be "strong" but not as robust as in the first semester when Philippine banks saw their trading income surge with the performance of the local stock market.
"I won't expect it will be as strong as the first half. The reason behind is as you approach a certain level, the drop in yields is now muted and limited. And that is true for the global environment including the Philippines," Valdepenas said.
Against the backdrop of a strong macroeconomic environment, Unionbank is on track to meet its 10-15-percent net income growth target for the year. During the first half, the lender’s profit surged 42.12 percent to P4.07 billion.
Valdepenas said the bank does not have to raise additional capital as many of its investments are in low-risk weighted assets such as government securities. Unionbank is still "comfortable" even with the implementation of Basel III, which requires higher capitalization for lenders.
Towards the end of the year, the lender will have almost 200 branches nationwide, having just opened new ones in Medical City, Makati and Nuvali in Sta. Rosa, Laguna.
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