Asia United Bank (stock: AUB) Corporation and its subsidiaries reported an impressive ₱8.6 billion consolidated net income for the first nine months of 2024, reflecting a 41% growth from the same period last year. This result also surpasses AUB's full-year 2023 net income of ₱8.3 billion, underscoring the bank's strong financial performance driven by increased revenues and improved loan loss provisions.
AUB's robust profitability was accompanied by improved financial ratios, with Return on Equity (ROE) reaching 22.4% (up from 19.4% in 2023) and Return on Assets (ROA) rising to 3.4% (from 2.5% last year). The bank’s growth was primarily fueled by higher interest earnings from its loan portfolio and investment activities, which saw its net interest income grow by 11% to ₱12.5 billion.
AUB's net interest margin also improved, climbing to 5.3% from 4.9% last year, reflecting the bank’s ability to optimize returns from loans and investments amid an elevated interest rate environment.
A key driver of AUB's income growth was the sharp decline in loan loss provisions, which dropped by 93% from ₱1.1 billion last year, thanks to improved credit quality. The bank's non-performing loan (NPL) ratio stood at 0.53%, down from 0.7% the previous year, indicating healthier loan management. Additionally, AUB increased its NPL coverage ratio to 120.7%, ensuring a strong buffer against potential loan defaults.
AUB’s total loan portfolio expanded by 6% to ₱198.9 billion, supported by a deposit base of ₱282 billion. The bank’s loan-to-deposit ratio remained stable at 70.5%, demonstrating efficient capital utilization. Of particular note is the increasing share of low-cost CASA (Current Account/Savings Account) deposits, which now represent 70% of total deposits, up from 66% a year ago. This shift towards CASA deposits lowers the bank's funding costs, contributing to profitability.
AUB’s total assets increased by 2% to ₱352 billion, while total equity surged by 25% to ₱56.6 billion. The bank's Common Equity Tier 1 (CET1) Ratio was at 19.6%, and its Capital Adequacy Ratio (CAR) stood at 20.4%, both comfortably above regulatory minimums, highlighting the bank's solid capital position and resilience.
AUB continues to capitalize on digital transformation as a key driver of its strategic growth. The bank became the first in the Philippines to integrate the Philippine Statistics Authority's eVerify system, streamlining Know Your Customer (KYC) compliance and improving account opening and loan application processes. This move is expected to enhance operational efficiency, reduce paperwork, and increase transaction security.
The bank's digital initiatives also include the AUB PayMate platform, which enables merchants to accept a variety of digital payments, and HelloMoney, its cross-border digital payment service, both of which continue to expand AUB's footprint in the digital financial ecosystem.
AUB’s strong financial performance has been reflected in investor confidence, with its shares rising by 2.17% to close at ₱61.30 on the Philippine Stock Exchange on Thursday.
With a strong balance sheet, improved credit quality, and strategic focus on digital innovations, AUB remains well-positioned for continued growth. Its record net income for the first nine months of 2024 underscores its ability to navigate challenges and capitalize on new opportunities, positioning the bank for sustained success moving forward.
- Record Profit: AUB's net income surged by 41%, surpassing its entire 2023 earnings.
- Strong Profitability: The bank improved its return on equity and return on assets, reaching 22.4% and 3.4%, respectively.
- Revenue Growth: Higher interest income from loans and investments contributed to an 11% increase in net interest income.
- Cost Management: Despite a 6% rise in operating expenses, AUB benefited from a significant drop in loan loss provisions, down by 93%.
- Improved Loan Quality: The NPL ratio decreased to 0.53%, with strong coverage at 120.7%.