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Proving core business potency in the new landscape

Proving core business potency in the new landscape. Competition for deposits. Focus on competitive advantage. Primacy of strong customer relationships. Prominence of risk culture. Return to core banking practices. Emphasis on leaner cost structures. New Realities, New Chemistry.

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Proving core business potency in the new landscape

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  1. Proving core business potency in the new landscape

  2. Competition for deposits Focus on competitive advantage Primacy of strong customer relationships Prominence of risk culture Return to core banking practices Emphasis on leaner cost structures New Realities, New Chemistry

  3. UnionBank’s long-term strategic imperatives • Solid profitability through improved recurrent income • Healthy interest margins • Asset quality preservation • Customer franchise expansion Resilient strategy framework • Commitment to exceptional customer satisfaction and loyalty • Brand values of expertise, relevance, and challenging convention Re-energized brand • Adherence to governance principles of transparency and sound risk management • Disciplined approach to pricing risk factors in support of a more aggressive lending posture Risk-adjusted returns • Acceleration in deposit base through improved sales management and product development systems • Excellence in service quality and leading edge in innovation Robust resource base • Emphasis on more sustainable revenue sources through expansion in loans & securities • Broadening market reach with strong bias for reputable and high-growth industries Resurgent loan & securities

  4. 2008 Performance: Stability in tumultuous times Net income position in 2008 suppressed by reduced gains from capital markets Non-interest income (in million pesos) Net income (in million pesos) 21% 31% Net trading gains (in million pesos) 78%

  5. 2008 Performance: Stability in tumultuous times Increasing dominance of recurrent earnings provided buffer versus sharp market volatilities Interest income (in billion pesos) +40% +46%

  6. 2008 Performance: Stability in tumultuous times Net interest position boosted by the twin-strategy of higher interest income & reduced interest expense Net interest income (in million pesos) 1.0 B Change in interest income & expense (in million pesos) 1.0 B Interest income Interest expense

  7. 2008 Performance: Stability in tumultuous times Margin improvement endured even in challenging market conditions Net interest margin %

  8. 2008 Performance: Stability in tumultuous times Efficiency gains helped decrease operating expenses even with greater transaction volumes Operating expenses (in million pesos) 2%

  9. 2008 Performance: Stability in tumultuous times Unyielding surge in deposit base a testament to UnionBank’s sustainable growth Outstanding deposits (in billion pesos) 51%

  10. 2008 Performance: Stability in tumultuous times Smart Banking led to deposit growth ahead of FOCUS 2010 program Outstanding deposits (in billion pesos) Superior sales management system Robust product management process Excellence in service quality & efficiency 10-year CAGR UBP = 26.4% Industry = 7.8%* *based on Sept 2008 BSP data Constant quest for innovation

  11. 2008 Performance: Stability in tumultuous times Strong expansion in loan portfolio supported by both consumer and non-consumer market segments Loan breakdown (net of allowance & bills purchased, in billion pesos) 55.6 +44% Quality loan growth anchored on prudence & risk consciousness 10-year CAGR UBP = 18.1% Industry = 3.8%* *based on Sept 2008 BSP data 38.5 Preservation of healthy loan spreads +55% Inclination towards industries of known strength & resilience +9% +25% +27%

  12. 2008 Performance: Stability in tumultuous times Strong credit quality maintained through sound risk management practices Net non-performing loans* *NPLs net of reserves; Loans net of IBCL

  13. 2009 Strategic thrust: Investing for the upturn

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