A consortium of successful Filipino industrialists and respected Taiwanese investment banks joined forces in 1997 to form one of the nation’s most solid financial institutions: Asia United Bank (AUB).

The company’s biggest shareholder is Republic Biscuit Corp, which controls 44 per cent and is owned by renowned businessman Jacinto Ng Sr, who is also the chairman of AUB. Other shareholders behind AUB, which currently has P52 billion (£756.9 million) in resources, include Kao Yu Philippines Holdings

Inc, Lambda Holdings Philippines, Citio Maunlad Investments Corp and Magis Equity Ventures.

Over the past 15 years, the small but profitable commercial bank has been on a course of steady, organic growth, increasing its presence across the Metro Manila area and neighbouring provinces in its mission to deliver superior and efficient financial services to local communities as well as the business sector. Last year, AUB purchased P400-million-worth of shares in the Cooperative Bank of Cavite, with the aim of converting the cooperative bank into a rural bank.

“We just started to get involved in the consumer side of banking last year. I believe that this is the right way to go” Abraham T Co, President and Director of AUB

“We just started to get involved in the consumer side of banking last year. I believe that this is the right way to go,” says Abraham T Co, President and Director at AUB. “The Central Bank has a policy of not giving branch licenses anymore in what are deemed crowded areas, which is basically Metro Manila. However, we were going to go into microfinance anyway, and this rural bank was in difficulty – it was problematic and was about to be closed. So the situation was that if we paid all the bank’s depositors, we would be given a certain number of branches, and after we completed our calculations we agreed to the deal.”

Last year, AUB’s capital adequacy ratio (CAR), a measure of a bank’s financial strength, stood at 15.31 per cent, well above the 10 per cent minimum required by the Central Bank.

The company’s income of P1.1 billion in 2011 represented a 10 per cent rise on the P1 billion it earned in 2010, and it was driven by margins gained on deposits, revenue from trading and income from its trust business, which continues to provide steady, recurring income for the bank.

AUB’s burgeoning remittance business also buoyed the bank’s income last year, especially from Filipinos working in the Middle East. Mr Co says, “The Philippines depends a lot on its overseas Filipino workers (OFWs), and luckily the OFW sector is more valuable than iron ore. It is more in demand. We have not seen any reduction in that area, in terms of people wanting to come back home. The growth may not be as much as before, in terms of people wanting to work abroad, but we do not believe it will drop either. In the worst case scenario growth will be flat, but flat is still okay: it is still $18 billion a year, plus the revenue from BPO (business process outsourcing), which is $9 billion a year right now and still growing fast.”

This year, AUB’s expansion continues with the acquisition of the banking assets and liabilities of Asiatrust Development Bank. The purchase comes after two years of negotiations and will add about P6 billion to AUB’s balance sheet. In addition, it increases AUB’s network of 72 branches by 28, bringing its total to 100, and AUB’s management hopes to see it reach 120 by the end of 2012.

Building on its current momentum and expansion, AUB is aiming to grow its net income by 45 per cent this year by focusing on boosting its consumer lending business. The bank’s target is to end 2012 with an income of P1.6 billion, fuelled by further increasing AUB’s mortgage and auto loans businesses, as well as its personal lending sector to take advantage of the low interest rate environment currently in the Philippines.