According to Union Bank chair and chief executive officer Justo Ortiz, good lending performance, both in consumer and corporate segments, aside from trading gains, were the profit growth drivers.

Net loan portfolio grew by 18.07 percent to P46.90 billion for the first quarter while net interest income went up by 21.64 percent, pushing the bank’s interest income from lending to 6.94 percent and 37.57 percent interest profits from securities.

Cost-efficiency, also, improved for the quarter as shown by the 7.82 percent reduction in the bank’s operating costs to P1.21 billion.

Ortiz traced this development to the approach instituted by the bank to maximize "business opportunities" to avoid any possible deterioration in asset quality, especially at this turbulent financial climate.

"Our strategy of seeking appropriate risk-adjusted return is paying off in this volatile," Ortiz said, in a statement, a copy of which was submitted to the Philippine Stock Exchange yesterday.

This is reflected by the 35.66 percent dip in the bank’s interest expense on deposits and bills payables.

Going forward, Ortiz said the bank management will "continue to optimize the value of business opportunities to the quality and growth of our profitability."

Victor Valdepeñas, the bank’s president and chief operating officer, meanwhile, said total operating income of the lender slid to P1.91 billion from a high of P3.14 billion in the same period the year past.

He explained that the nearly a quarter decline was due to the "deliberate strategy" of the bank management to "mitigate the downside implications of negative market environment through calibrated engagement in the capital market."

Considered as well as was the "base effect arising from one-off gains from non-recurring transactions" in 2007, which brought the bank’s net profit to soar to P3.14 billion during the first three months.

Improving cost efficiency softened the impact of a narrowing in operating income, Valdepeñas said, citing a 7.82 percent dip in the bank’s total operating expenses to P1.21 billion against P1.32 billion in 2007.

"Sustained improvements in productivity and cost management" were the catalysts, Valdepeñas said as the bank continues to adhere to this tack to further strengthen its bottomline.

"We will take our already very good cost management system yet further while increasing the robustness and durability of our earnings stream this year," he said.