Asia United Bank Corporation (“AUB” or “the Company”) is a domestic corporation that provides commercial banking and other financial products and services, including corporate and consumer loans, deposit products, corporate banking, treasury and trust products, cash management solutions, and other services. These products are offered to individual consumers, MSMEs, and corporations.2
The Company’s operating businesses are organized according to each business segments which represent the strategic business unit that caters to AUB’s identified markets. These business segments are:3
- Commercial – provides lending, trade and cash management services to corporate and institutional customers, which include large corporate, middle market clients, and entrepreneurs.
- Consumer – offers consumer lending products to retail customers that include real estate loans, salary loans, auto loans, pension loans and credit card business.
- Treasury – functions by managing the Company’s reserve and liquidity position through investment on sovereign, corporate debt instrument, commercial paper and other securities in the Philippines. It engages in currency trading and offers foreign exchange instruments to corporate customers to manage AUB’s foreign currency exposure.
- Branch Banking – offers retail deposit products that include current and savings accounts, time deposits in pesos and U.S. dollars and lends to corporate and institutional customers through its lending centers situated in selected branches.
- Others – includes income from trust activities, remittances, investment banking, and gains on foreclosed properties.
The segment results include internal transfer pricing adjustments across business units as deemed appropriate by management. Transactions between segments are conducted at estimated market rates on an arm’s length basis.4 These segments had an overall 23.2% growth in 2016 operating income to P7.569 billion from P6.146 billion in 2015. This is caused by the following:5
- Nineteen and tenth percent (19.1%) increase in Net Interest Margin
- Thirty-seven and tenth percent (37.1%) increase in non-interest income mainly from Trading and Securities gain
- Foreign Exchange gain specific to the interest margin in which the AUB’s total interest income rose to P7.268 billion, 18.9% higher compared with 2015. This was due to a 21.5% growth in interest income from commercial loans and consumer loans such as auto, housing, and salary loans.
- AUB expanded its consolidated distribution network to 239 (Parent Bank with 216 branches), with eight (8) new branches located within Metro Manila.
The illustration below consists the operating income for each segment of the Company.
Branch Banking is the highest contributor in the operating income of AUB, given the eight (8) new branches opened by the Company during 2016 that has enabled the bank to generate substantial growth in deposits. Total deposits increased by 10.6% from P117.244 billion as of December 31, 2015 to P129.705 billion as of December 31, 2016 as a result of the Company’s intensified deposit-generation campaign for branch banking and other business segments.6 Commercial Banking also managed to grow its portfolio from P56.731 billion to P77.295 billion due to lending of loans to significant corporate and public-private projects on various sectors.7
The Company’s total assets reached P165.501 billion on December 31, 2016, an increase of P11.945 billion or 7.78% from December 31, 2015. The diagram below shows the growth of assets in the past three (3) years.
During 2016, 59% or P98.091 billion of the total assets is mainly contributed by Loans and Receivables and 9% or P32.855 billion of the total assets by the Amounts Due from BSP. The increase of Loans and Receivables is a result of the bank’s continued efforts in maximizing its cross-selling potential for commercial and consumer loans across their product types that include Credit Cards, Housing Loans, Auto Loans, and Salary Loans. Loans and Receivables increased by 24.2% from P10.158 billion to P12.616 billion.
The significant decrease in the AFS Investments was due to a partial offset of the increase in other Treasury assets particularly, an increase in the HTM Investments with of 167.7% from P5.622 billion in December 31, 2015 to P15.050 billion as of December 31, 2016 in order to enhance AUB’s ability to provide a more stable income flow.
Meanwhile, the Company’s Nonperforming Loans (NPLs) are as follows:9
NPLs of the Company is 1.50% of the total Loans and Receivables. NPLs refer to loans whose principal and/or interest is unpaid for thirty (30) days or after they have become past due in accordance with existing BSP rules and regulations.
Moreover, AUB has acquired four subsidiaries to expand its banking and financial product offerings to its clients.
Below is the corporate structure of AUB:10
RBA has 14 branches and five (5) micro-banking offices in Angeles City, Pampanga that provides deposit, lending, remittance and insurance services to retail customers, rural and urban industries, farmers and tenants, and other low-income earners.
CURB provides banking services primarily microfinance loans and micro savings to the rural population, particularly to small-scale entrepreneurs in Cavite, through its four (4) branches.
AULFC is engaged primarily in the business of financing and financial leasing of motor vehicles such as brand-new passenger cars, delivery vans, trucks, passenger buses as well as warehouse equipment like forklifts. It also operates a wholly-owned subsidiary, Asia United Fleet Management Services, Inc. (AUFMSI), which is being geared to offer operating leases.
RediMoney Express PTE Ltd. provides cash remittances in Asia, Middle East, Europe, Canada, and the United States which include door-to-door cash/funds delivery services, bank deposit services, online cash and offline pick-up services, cash card and tele-remittance (via cell phone) services, bills payment services, and cash-a-lubong services in Manila.
AUB’s Stockholders and Management
AUB’s main stockholders as of December 31, 2016 are the following:11
The corporate stockholders of the Company are owned by a few of the Board of Directors of AUB. The relevant inter-ownership of these corporate stockholders is illustrated below.12
Republic Biscuit Corporation (REBISCO), a recognized pioneer in the Biscuit Industry, is owned by the Chairman of the Board of AUB Jacinto L. Ng., Sr. (40.00%), Director of AUB Jonathan C. Ng (20.00%), Director of AUB Jacob C. Ng (10.00%), Jacinto C. Ng, Jr. (20.00%), and Ciudad Kuvera Investments Corp. (10.00%).
Kuo Yu Philippines Holdings Corporation is a holding company where AUB Director Lin Hong Dow effectively owns 98.52% of the total outstanding capital stock. Lin Hong Dow is the Chairman of Kuo Yu Philippines Holdings Corporation with AUB Director George T. Chua owning 1.48% of Kuo Yu Philippines Holdings Corporation through preferred stock.
PCD Nominee Corporation (“PCDNC”) is a wholly-owned subsidiary of Philippine Central Depository, Inc. (“PCD”). The beneficial owners of the shares registered under the name of PCDNC are PCD’s participants who hold the shares in their own behalf or in behalf of their clients. The PCD is prohibited from voting these shares; instead, the participants have the power to decide how the PCD shares in AUB are to be voted. The only participant of PCD who owns more than 5% of the Company’s outstanding capital is Lucky Securities, Inc. account which is a total of 7.58%.
Lambda Holdings Corporation, a holding company, is owned by Asia United Worldwide Holdings, Ltd. (40%), AUB Director Jonathan C. Ng (20%), AUB Director George T. Chua (15%), Jacinto C. Ng, Jr. (15%), and Jan Gold Investments Corp. (10%).
AUB’s Directors and the relevant experiences of each are listed below.13
Jacinto L. Ng, Sr. was first elected as Chairman of the Board in 1997. He also served as Chairman and/or Director of Republic Biscuit Corporation (Rebisco) and Extraordinary Development Corporation. Jacinto Ng holds a B.S. in Chemical Engineering from the Mapua Institute of Technology.
Ramon Y. Sy is an Independent Director and was first elected as Vice-Chairman of the Board in March 2012. Also, he is currently the Chairman of Apex Mining Co, Inc., Ramsy Corporation, and Xcell Property Ventures, Inc. He holds directorship positions in six companies. Mr. Sy also served as Chairman and CEO of UCPB General Insurance Co. Inc. He was president of the International Exchange Bank.
Abraham T. Co has been the President of the Bank since June 1997. He is currently the Chairman/Director of the following AUB subsidiaries: Asia United Leasing and Finance (AULFC), Rural Bank of Angeles (RBA), and Cavite United Rural Bank Corporation (CURB). He was formerly the President of First Malayan Leasing and Finance Corporation, Head of the Consumer and Operations Support Group at Rizal Commercial Banking Corporation, and the President of BA Finance Corporation. Mr. Co holds a B.S. degree in Chemical Engineering from the University of the Philippines.
Lin Hong Dow or Eric Lin (English name), was a Director of AUB from 1997 until 2013. He was re-appointed as Director on December 2016. Also, he is the Chairman of Kuo Yu Development Co. since 1990, and the President of the Chinese Taipei Olympic Committee since 2014. He holds a degree in Civil Engineering from Private Kainan Commercial & Technical School.
Justice Adolfo S. Azcuna is an Independent Director of the Bank since August 2011. He also serves as an Independent Director in RBA and CURB. He was the Chairperson of Philippine National Bank; Director of the Development Bank of the Philippines; and the Chief Presidential Legal Counsel, Press Secretary, and Spokesperson under President Corazon C. Aquino.
Jacob C. Ng was elected as Director of AUB in July 2016. He is also the First Vice President, Chief Transformation Officer, and Head of Consumer Lending Group. In addition, he serves as a Director of AULFC and Rural Bank of Angeles. Mr. Ng was a Program Manager for Citibank from 2005 to 2007. Mr. Ng holds an A.B. degree in Development Studies from the Ateneo de Manila University, and an MBA in International Management from Thunderbird School International Management in Arizona, USA.
Jonathan C. Ng was appointed Director of AUB in 1998. He currently serves as director of AULFC. He is also the President of Rebisco and Vice-President of Suncrest Food Corporation. Mr. Ng holds an A.B. degree in Management Economics from the Ateneo de Manila University. Mr. Ng served as Director of AUB until 20 December 2016.
Company’s Business Risk and Plans for Development
AUB is confident that it can effectively compete with competitors due to the Bank’s leading information technology platforms through seamless experience for customers in transacting with AUB whether through branches, ATM, or mobile and internet banking14, expanding branch network, and highly experienced management team.15 AUB also maintains a disaster recovery data center with the capability to host critical banking applications in the event of a shut-down at the primary site.16
Moving forward, the Company will focus on the following activities:17
- Increase its ability to lend to provincial accounts where commercial and industrial activity is growing at a faster clip than in Metro Manila.
- Improve coordination and cross-selling of the Bank’s products to increase account profitability
- Maintain good asset quality by thorough account evaluation, watchful account management, and maintaining a well-diversified portfolio of accounts
1 PSE Edge, AUB Company Disclosures, SEC 17-1 (2015 & 2016) and Sec 17-2 (1st-3rd Qs of 2017), https://goo.gl/8eLNLx
2 AUB SEC 17-2, September 30, 2017, Notes to Interim Consolidated Financial Statements, General Information, p.13, https://goo.gl/AtvhHd
3 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Business and General Information, p.10-11, https://goo.gl/cLKV6R
4 AUB, Our Business, https://goo.gl/qVFkqY
5 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Business and General Information, p.9, https://goo.gl/cLKV6R
6 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Management Discussion and Analysis and Results of Operation, p.31, https://goo.gl/cLKV6R
7 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Business and General Information, p.12, https://goo.gl/cLKV6R
8 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Management Discussion and Analysis and Results of Operation, p.30, https://goo.gl/cLKV6R
9 AUB Audited Financial Statements for year 2016, Notes to Financial Statements, 9.Loans and Receivables, p.68, https://goo.gl/cLKV6R
10 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Business and General Information, p.15, https://goo.gl/cLKV6R
11 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Operational and Financial Information, p.26, https://goo.gl/cLKV6R
12 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Control and Compensation Information, p.60, https://goo.gl/cLKV6R
13 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Control and Compensation Information, p.47-51, https://goo.gl/cLKV6R
14 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Management Discussion and Analysis and Results of Operation, p.29, https://goo.gl/cLKV6R
15 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Business and General Information, p.17, https://goo.gl/cLKV6R
16 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Exhibit 29-3 Supplemental Risk Management Discussion, p.76, https://goo.gl/cLKV6R
17 AUB SEC Form 17-A for 2016 as of 2017.04.17 final, Business and General Information, p.12, https://goo.gl/cLKV6R