Union Bank of the Philippines (UBP) Earnings Call Transcript & Summary

Okay. Good afternoon, everyone. Welcome to our analysts briefing. Today, we are going to present the macroeconomic and industry outlook as well as the financial performance of Union Bank and its subsidiaries. But first, here are the house rules. [Operator Instructions] So this briefing is recorded for documentation purposes and will be uploaded to our website after this event. [Operator Instructions] We have today, Mr. Johnson Sia, Union Bank Treasurer and Head of Global Markets to present the macroeconomic and industry outlook. Afterwards, Mr. Dmi Lozano, Union Bank's Chief Financial Officer, will present the bank's financial performance. At the end of the presentation, we will conduct a satisfaction survey and then proceed to our Q&A session. Before I turn over to Mr. Johnson Sia, we would like to begin our 2023 earnings briefing with a short video. [Presentation]

Okay. Good afternoon, everyone. Nice to see you all again. So I will do the first part, which is to present to you the macroeconomic and market update and outlook. Now the problem with presenting this is that it always -- your numbers are always stale. We updated this, I think, 2 or 3 days ago. And when I looked at the numbers, they changed a bit. So anyway, we always start -- we focus on the rates market because that's pretty much what's driving things these days and the financial industry, obviously, in particular. And the outlook of rates is that it is still on its way down, right? It's not a matter of if, it's a matter of when, how fast and how much, right? Now we've noticed that ever since the last outlook, which we held last November, things have moved around quite a bit, right? The big thing started when the Fed, last December, suddenly changed their dots to a 75 basis point cut. And then the market just went on fire, and at some point, early January price as much as 130 to 140 basis points of Fed cuts by the end of the year. Now that has pulled back since partly because the Fed speakers who are kind of trying to manage the market expectations also. And also the fact that inflation is not slowing down as fast as it should be. So let's look at the next slide, which shows how the market moved, right? So again, this is just a few days ago when the market was pricing in almost a full -- if you look at the June '24 numbers. So this is the probability of a rate cut now. It shows that the market is pricing in a June cut 92%. Now as I said, this is already a bit stale. As of last night, after the PPI numbers, the market dialed back again and price just a 66% chance of a cut in June. It's still pricing in a 3 rate cuts this year. If you look at the chart on the screen now, it's showing almost 4 by December of this year now. But the consensus still remains at 3, which is now in line with the Fed. So it would seem like the Fed dots were right all along and the market was really quite exuberant. The other thing to watch for, of course, is next week's FOMC where they will update the plots. Now the risk there is, of course, if they dial back and say that, okay, from 75 maybe just 50, right? And that can potentially move the markets. Next one, please. Okay. So there, that is the consensus. So notice that the big drop there, this is the expected Fed rates. So it has been moving. As of November, the market was pricing in the December 2024 rates to be at around 4.5%, which is a 75 basis point cut -- and then the Fed sparked the euphoria by mid-December, it dropped to as low as 3.8% and as low as around 3.7% in January, which implies a 140 basis point rate cut. And as I said, since then, it has backed up to back where we sort of were in November. Next slide. Okay. So how has the U.S. treasuries? Again, the U.S. treasury has followed the 10-year bellwether, reached as low as 3.8% in early January. It has dialed again back -- the chart there shows 4.15%, latest were 4.28%. Again, it's following expectation on when the first Fed cut is going to be. Next slide. Okay. So the yield curve, obviously, is inverted. And if you look at the sovereign spread that we're showing the Philippines and Indonesia, the 5-year spread has steadied slightly below -- it's around 90 basis points. And it's pretty steady. The spreads are kind of constant, but they're all obviously pricing in eventual Fed cuts. Next? Okay. The risks of a Fed move is actually, I would say, pretty balanced down now. The risk that they will push back -- I mean, hold back in cutting rates more aggressive or earlier is kind of also balanced with some rising concerns, particularly about real estate -- particularly about commercial real estate in the U.S., and that has also been spreading towards the last round of analyst briefing meetings that we took. People are always concerned about our exposure to the commercial real estate, for example, right? So that is always at the back of everyone's mind. But if -- so that is why I'm saying it's kind of an event that you have the risk of inflation persisting, but there's also that kind of weakness and that's always making the Fed think twice about prolonging the high level of interest rates. So that's why we think that at some point later on this year, unless you really see surprises in inflation, they will start easing rates. Next. Okay. Oil has been -- again, this is an outdated chart, where it's saying 84 [indiscernible], but last night, guess what, it broke 85 to a concern on -- I understand it was inventory concerns. But it's been holding close to that range that we've seen since September to December. Next? Okay. Now in the Philippines, it's a similar story. A bit more hawkish if I may say so myself, the governor is particularly on the hawkish side. So although he's toned down a bit. If you look at last year, he was still quite hawkish and was kind of saying that there might be another hike but lately, he's been saying that season for hikes is over. It's really more that easing may not come soon because the inflation has yet to return to the 2% to 4% level. Now the inflation, of course, last month was slightly higher than what analysts expected. We can argue whether it was -- it was primarily transport and, of course, rise as well, and we can argue whether economic -- sorry, monetary policy will actually control those factors. But the consensus is that if the Fed does start cutting, the BSP will have to follow either immediately or soon after. And the reason is that if they don't do so, then the interest rate differential will widen. When the U.S. dollar starts weakening, we'll end up -- the Philippines will be a recipient of hot money that's going to pressure the peso, and they will have to balance that by cutting rates as well. So that is the path that we expect that they will follow, the Fed and other major central banks, maybe with a slight lag. Next? Okay. So as mentioned, this is the inflation. It kind of rose in February, ending a 4-month decline and also above expectations. And if we go to the next slide, which shows the breakdown, I'm sure you're all familiar with the numbers now. Transportation is the one, but that's largely on base effect. And if you go to the next slide, on rice, we mentioned that it is highest at 23%. Although the monetary board, some members of the monetary board have been noted for mentioning that these are -- this requires a nonmonetary policy solution. So as I said, you can't bring rise prices down by raising rates. Okay. Next. So again, the local market is also expecting the BSP to cut. Again, it's a matter of when and not if. That is why the yield curve is actually quite flat. Anything -- it seems to hover at 6.25%. If you look at whether it's 3 years, 5 years, 10 years, 20 years, everyone is trading at 6.25%. I think there are 2 reasons for that. One is, of course, the expectation of a rate cut but the other one is also the amount of system liquidity available, so people are putting liquidity to use. If you look at -- a lot of asset managers, for example, and some commercial banks have actually enjoyed an increase in the yield of their portfolio in the last 2 years, that 400 basis points. So the biggest danger for a lot of institutions now is when rates start going down. So we're seeing a lot of money being put to work, to lock into those rates. So that's why it seems that the 6.25% is a magic number. Now if you look at the next slide, which shows the recently concluded RTB, where PHP 584 billion was issued, among that was PHP 243 billion. So new money was actually PHP 341 billion, but then there was PHP 700 billion of maturities in the last week. So if you look at the system, there was actually an inflow of around PHP 450 billion. So the system -- the liquidity continues to be quite favorable. And finally, on the dollar/peso, it's been consolidating. It's really a function of, again, the U.S. rates outlook now. The weakness of the U.S. dollar, actually, the last 2 days, brought dollar/peso down to as low as PHP 55.30. It has rebounded since, especially with the inflation in the U.S. as well as PPI last night, so it's back to PHP 58.85. But this said once the Fed starts cutting and it drops to, let's say, below PHP 55, then that will really pressure the BSP to follow. Otherwise, we're going to be uncompetitive relative to the other currencies. Okay. So to summarize. The outlook is that we've seen the highs in rates. The rate hike cycle is over. Bold words, of course, anything that happened, but I think we've really seen the highest, okay? So rate cuts might be pushed back. People have gotten ahead of themselves. But I think it's just a matter of when and not if, it's when and how much rather than if it's going to happen, okay? But the risks are even. The chances of rate cuts being held back is really our persistent inflation as well as the strong growth in the U.S., but there are also emerging downside risks such as the real estate sector and possible overheating of the economy. So I will end there and turn this over to Dmi. Thank you for listening.

Hi, good afternoon, everyone. Just for a change of pace, just wanted to show some numbers that aren't financial, at least to get things kicked off. Union Bank, all of our teams have really worked hard to move forward on our digital transformation. This has been the strategy since, I think, 2015, 2016. So we do track some key metrics that I wanted to share with you guys, just to show how we have been progressing, right? So here's a couple of them. One, on the upper left, Union Bank does hold the highest NPS scores in terms of brand perception and mobile platforms. So these are very critical because it tells us what the customers are thinking about us. Union Bank Online, our most popular app, is considered as the most downloaded app at 12.6 million and has the highest app rating in Google Play Store at 4.7. And despite only being the seventh largest bank, we ranked second in InstaPay transactions by volume last year. In fact, there were several months where we actually were #1. So this is quite amazing. In fact, I was pleasantly surprised when I saw these numbers. It shows that not only are people getting our apps, but they're also using it quite extensively. So now let's dive into the metrics that we look at, which are more financial. A few years ago, we made a bold statement that our objective is to become the most profitable retail bank within 3 years. We also have metrics that we follow to see if we're moving in the right direction. Let's take a look at a few of them here. Customer growth more than doubled over the last 5 years to 13.9 million individuals. That's quite an achievement, which I think is the largest in the industry. Our retail loans to total loans have grown by 3x -- are 3x the industry average. So we're close to 60% retail now. We booked a record high net revenues of PHP 70.8 billion in 2023, and this is largely coming from recurring income, mostly net interest income and fees rather than what in the past we were known for, which was trading profits. And lastly, our NIMs are amongst the highest in the Philippine banking sector, which last year, we ended up at around 5.8%. So all of these are moving in the right direction. All of them are -- some of them maybe would like it to be higher, but all of them are definitely moving in the right trajectory for us to achieve being the top retail or the most profitable retail bank within 3 years. So the next slide, sorry, I shouldn't be looking here. The next slide, Union Bank delivered PHP 9.2 billion net income and single-digit ROE of 6% in 2023. Our profitability slowed down this year due to the onetime Citi integration costs, basically a full year of Citi integration costs and particularly the impact of the transition service agreement we have with Citi. The good news is we're seeing the light at the end of the tunnel. And it should be -- and most of you, if you are Citi customers, probably have gotten already some correspondence that this will be completed soon, hopefully before the end of the month. So this cost should be off our books by the second quarter. If we normalize the numbers for one-off incurred by the bank, both in terms of the Citi integration and some unexpected additional credit reserves, we would have made roughly PHP 16 billion last year and our ROE would have been a bit above 10%. We'd like to really reiterate that our fundamentals remain very strong as we will show later on in some of the slides, especially on the top line revenues. When you look at the growth in net interest income and fees, you'll see that our platform is quite robust in terms of our future sustainable profitability. The bank recorded its highest net interest income in 2023, 34% year-on-year growth, mainly due to the growing proportion of consumer loans and the full year impact of the acquired Citi consumer business. Both of these resulted -- also helped us achieve a net interest margin of 5.5%, which is the highest we've had in recent memory. Another key component, and you probably have guessed it from all of what I've been saying, is that we've really diversified our consumer loans over the -- and we've achieved double-digit growth and diversified the sources of this growth as well. We've shifted our focus into the consumer loans segment. Our consumer loans now to total loans expanded to 58%, which is close to 3x the industry average, as I mentioned earlier. The consumer portfolio of the parent bank grew by 12% while subsidiaries grew by 33%. Wholesale was fairly flat. We feel that this is one of the most diversified portfolios in the industry across credit cards, mortgage loans, features loans, vehicle loans and the growing proportion coming from personnel and cash loans. This is critical so that we can make sure that even if one of the segments start to slow down, the other segments will probably be catching up. One second. So on the CASA side, our deposits continue to grow. We ended last year or the year before with PHP 621 on an average daily balance and that moved up to PHP 705. Now this is -- the achievement here really is, last year was tough for CASA. We had competition not only from other banks, but also from time deposits in particular. So it was an achievement of the team to continue to do this, which is a testament really to the transaction banking and retail banking group that have allowed us to continue to service our corporate customers and ensure that their funds, their CASA funds remain with us. So CASA is at 59% of total deposits. This is something that we'd like to see pick up again. So a lot of focus this year will be on growing our CASA ratio above 60. Retail consumer transactions have been driving our fee income. That's something that's quite critical. We have 13.9 million customers. And the goal is for them to actively use their cards, use these for transactions. So noninterest income grew by 41% year-on-year. And this has been mainly driven by the current fee-based income, which grew by 46%. Our income from ForEx and ROPA remained quite consistent. We want to highlight the significance of our growing fee-based income, which has largely been driven by the high proportion of consumer loans to total loans. Consumer transactions from the parent bank increased by PHP 3 billion or over 50% and while fees from our subsidiaries grew by 46%. And if you look at Citi, in particular, the acquired Citi consumer business contributed PHP 6.5 billion of fees for the bank. So we expect this to continue to mirror the growth at -- or more than mirror our growth in consumer. OpEx, which has been one of our challenges, grew quite a bit, mainly due to the onetime costs for integration of Citi. Total operating expenses grew by 43% and this was mainly due, as I said, because of Citi and also the full year impact of Union Digital. If we normalize these factors, core operating expenses saw a moderate increase of 14%. But this is definitely a focus for us. Our goal is to bring this down. Our cost to income currently stands at 63%, which is one of the highest it's been for us. But if we include the impact of our onetime expenses, this ratio would have been closer to 56%, which we still feel is high, and we expect to bring this down, especially as we do more consumer, grow Union digital and our other subsidiaries. We expect this to decline further, obviously as we exit from Citi. Our credit cost expanded to 2.6%, but 0.7% of this can be considered as one-offs coming from legacy wholesale accounts. Hence, our ECL, including the expansion of new businesses, is at 1.9% which is reflective of our growing consumer profile. The bank's NPL ratio went up to 6.3% compared to the industry figure of about 3.5%. As we have explained over the prior periods, the bank would typically have a higher NPL than the industry due to its higher proportion of consumer loans. Our consumer loan NPL stands at 7.2%, compared to the industry's 5.8%. The parent bank, which holds a mortgage and unsecured credit card portfolio, has a better NPL ratio of 5.3%. So the consolidated NPL is driven by the subs. The consolidated NPL ratio for our consumer segment stands at 7.2%. This is attributable to the loan expansion of Union Digital, the bank subsidiary focusing on serving the underserved sectors. Although this segment entails higher risk, the yields from the personnel loans can compensate for the elevated risk associated with this segment, but it's never that simple. So our goal really is to make sure that we keep finding ways to improve collections, improve credit scoring so that we keep driving NPLs down. The same goes for our coverage ratio. The parent bank's consumer coverage ratio is better than industry at 69%. Notably, our credit cards classified as unsecured is 100% fully covered. The reason why consumer coverage is lower than 100% is due to the nature of our consumer portfolios. Mortgage loans are fully collateralized and have a lower loss given default resulting to a coverage ratio of roughly 32%. The second largest portfolio of the banking group, which is features loans has a high recovery rate facilitated by the automatic debit arrangement with DepEd and resulting also in a coverage ratio of 17%. So when you blend all of that, it brings our consumer ratio down to 69%. The bank's capital adequacy ratio and common equity -- and CET1 ratio, both at group and parent levels, is more than enough to cover for the regulatory requirements. We are anticipating that some of you will ask why are we going to raise PHP 10 billion of capital by 2024 or later this second quarter? The rationale behind initiating this activity is because our CET1 ratio at the parent level of 12.4% is below where our peers are today. The decline from 13.2% in December to 12.4% in Jan is attributed to the operational risk capital charge coming from the growing revenues of the consumer business. We've also declared dividends earlier this year because we want to be consistent as a dividend paying company. So taking all of this into account, the bank deems it necessary to strengthen its capital ratio to sustain its growth for the year on both the parent and subsidiaries, particularly Union digital, as we still expect quite a bit of growth from UD and also our consumer business. So what do I want you guys to walk away from here? What thoughts do I want you guys to keep? In closing, we'd like to highlight that 2023 signifies a new phase for Union Bank, as a consumer-focused bank. We have clearly shown that our digital strategy paved the way in terms of acquiring new businesses and extending our market presence. In the first full year of the acquired consumer business and establishment of Union Digital together with the parent bank's expansion of its consumer portfolio, the bank has achieved record-breaking net revenues. Our net interest margin and fees as a proportion to assets rank among the highest in the industry, possibly positioning us within the top 3 in terms of these ratios. However, we continue to invest for our future. We have incurred onetime integration costs from the acquired Citi business, and this will continue until the first quarter of 2024. But this benefit goes beyond integration as this also improves what we provide to even the legacy Union Bank customers. As soon as we complete the integration, our cost to income would start to go down. Our target is to get it closer to 50%. And ROE, consequently, would also be improving, moving back to double digits. Moving forward, as we expand our revenues further and remove the costs associated with the integration, we will go back to the above industry financial metrics again. And hopefully, the cross-selling will really begin in earnest, and that's what we expect to help continue to grow our revenues moving forward. And that's it. Thank you. I think we'll set up for the Q&A.

[Operator Instructions] Okay. Thank you for answering our survey. So now on to Q&A. [Operator Instructions]. Okay. So maybe to start the ball rolling. The first question is something that was sent into us. This comes from Elizabeth Santiago of Abacus Securities. Her question is how much total nonrecurring costs related to the Citibank acquisition did the bank incur in 2023 and in 4Q 2023? How is Citibank integration tracking in the first quarter of 2024 and will there be any unexpected costs?

When we talk about integration, there's 2 costs, right, the TSA, but we also have internally our cost of building the systems, making sure that the transition -- that we're ready for the transition. So last year, and Carlo, correct me if I'm wrong, the cost was about PHP 5 billion in total. So that's for all of 2023. Now 2024, unfortunately, we still have that cost at least for the first quarter. It should be completed. We expect about PHP 1.5 billion in continuing costs for the first quarter of 2024. Now it's on track. Again, you've received the -- most of you have received the notifications. We've already done 3 dry runs in terms of getting ready for the integration, which is going to be on March 2024. So far, so good. And hopefully, we're out of it. Now it doesn't mean all of the costs will disappear. Obviously, some of that cost at PHP 5 billion, we need to -- we will still have to retain -- to continue to keep the service at the same level. But we're looking at probably 70% of that to disappear once we've completed this.

The next question also comes from Elizabeth of Abacus Securities. Her question is more on the asset quality. How much of provisioning was nonrecurring or unusual in 2023? What is your credit cost guidance for 2024? And are total provisions expected to be lower in 2024 compared to 2023?

So we -- about 1/3 or 0.7% of our 2.6% credit cost is really due to legacy wholesale accounts that we were cleaning up last year. So having said that, we still do expect about PHP 800 million more in the first quarter, which we actually booked last month -- or sorry, in January related to these wholesale accounts. But after that, we don't expect any more ECL outside of the normal course of business. So ECL for 2024 would depend, of course, on how fast we grow Union Digital. That's one of the primary movers. But note that while our normalized cost, excluding the one-off, is 1.9%, this only considers that UD is 2% of our total loan books. So it really depends on how fast we can ramp up UD and hopefully, I mean, it's a double-edged sword. If we can ramp it up, that means we're really successfully penetrating the underserved or under-banked segment. The margins are very good. But obviously, even if that's successful, the ECL will also follow that. Again, having said that, the yields and NIMs will more than cover all of this additional ECL, but we don't expect anything -- again, you never know, but we don't expect anything unusual for 2024.

Okay. I guess in relation to that question, could you please provide more details on NPL formation for the bank? What do you think is driving this for credit cards and personal loans?

Well, the bank's NPL level is largely a factor of our loan mix. We have the second highest proportion of consumer to total loans at 58%. So consumer will typically have a higher NPL than corporate. So if you strip out the NPL of our consumer, our ratio is slightly higher than the industry. The reason is due to the subsidiaries, particularly Union Digital. So our consumer is not just cards and mortgages, we also have higher risk personal loans in that portfolio. So the mass market segment and also the motorcycle business of CSB also tend to have slightly higher NPLs. So these businesses would have higher NPLs versus regular consumer portfolio like cards and mortgages. But again, the margins are there. So it's a question of understanding what risk you're taking, having the right credit score. So it helps that we have a very strong digital -- sorry, data science modeling that allows us to really take a very close look and helps us select the target market that gives us the best yields. Looking at the parent bank NPL, which is where the credit cards, mortgage loans are booked, we're actually better than industry. On the corporate side, we mentioned that there's one account that was classified as NPL at the end of 2023. While it's only one account, it is a disproportionately large one since we have a very small corporate book versus other banks, which is why NPLs jumped in the fourth quarter. But that is also what we've covered in the first quarter of 2024.

Okay. Shifting gears a little bit on your retail business. This increase in competition in retail loan space, particularly in credit cards impacting Union Bank.

Well, I'm not sure if it's impacting us yet, but we are seeing increased competition in the consumer space. I think other banks have taken notice that this is a sector that has high growth and if done properly, good margins. So we've seen a lot of disclosures from some of the other banks that it's a segment that they now have been focusing on, given the large opportunity. Having said that, we think there's still room for growth for everybody. The pie is getting bigger as well. So it's not -- there's more competition, but the pie is getting bigger for all of us. We are a consumer-driven economy and the demographics of our country still points to further growth in GDP, hence the growing income segment. So industry reports estimate that there's a total of 13 million outstanding credit cards in the country. On average, a person may have at least 2. So imagine that means only unique cardholders are around 6 million. So this indicates that banks -- and I'm just using credit cards as a proxy, right? But this indicates that banks are currently providing credit cards to less than 15% of the working population. So there's still a lot of room for people who need credit, right? So when we look at the business, it's really -- there are people -- we talk about people being able to open bank accounts. We talk about people being able to get access to the banking system, but also what that means is they get access to the credit -- getting their own credit. So that's -- we think there's still a lot of room for growth there. And also, by the way, you need to invest in technology, you need to invest in the credit scoring modeling, experiment a little bit. And maybe in the early days, it's a bit difficult, right? So hopefully, we've been advanced in doing these things, and that gives us a little advantage versus the competition.

Okay. The last question from Elizabeth is actually two parts. Maybe the first one, Johnson, you can take this. I know you talked about this earlier as well, but could you just maybe repeat for some of the -- for our participants what your outlook is on policy rates for 2024? And then maybe for Dmi, how do you expect this to affect the NIMs of Union Bank.

Okay. So the bold statement is that we've seen the highs and it will only go lower from here, right? But exactly when, that is the tricky part. The consensus now, and that's also our view is that we'll see anywhere between 50 to 75 basis points of cut, both by the Fed and by the BSP by the end of the year. The risk is that it will be pushed back a bit further, so we can probably see maybe 50 basis points this year and the rest will come next year, right? As I also mentioned earlier, the reason also even if there is suddenly a substantial weakness, particularly on the housing sector, then the Fed might be forced to accelerate.

Well, on the NIM side, let's start with '23, right? Our NIMs went up by 50 basis points despite higher funding costs throughout the year. And that was because of the mix of the consumer side, right? So what will happen in 2024. We continue to expect that mix to focus on and go over 60% for consumer. And hopefully, if while later this year funding cost starts to go down, that will give us 2 factors that will help further expand the NIMs. So definitely, we expect the NIMs to improve. And again, I think the big factor would be how quickly will interest rates start to go down.

Okay. So before we move on to the rest of the questions that were sent in, I just want to check the audience if there is anybody who would like to ask a question live. And also our participants on Zoom? Okay. Next question comes from Lisa [indiscernible] of PNB. What is Union Bank's loan growth and ROE target for 2024? Do you expect the same growth of its OpEx in 2024? And will the cost-to-income ratio stay on its current level?

Okay. So that's a couple of things. So on the loan growth, we do expect to be double-digit growth again, but primarily on the consumer side, where we expect mid- to high teens growth. Wholesale or corporate will continue, but probably in the single-digit level as well. We don't normally give guidance in ROE and CPI, but obviously, if our numbers last year continue to improve and our cost of Citibank and our unexpected provisioning goes down, then the ROEs should see significant improvement. Cost-to-income ratio, again, a big driver of the underperformance for us last year was Citi, the Citi integration. So that alone, if we go from PHP 5 billion to PHP 1.5 billion this year, already will show quite a bit of an improvement. So easily back down to where we were in the previous years, which is probably in the mid 50s.

Okay. There are two questions from Joahnna See Soriano of BofA that was sent in via Zoom. Her first question is, May I clarify whether the 30% or PHP 1.5 billion that will remain is already part of the integration cost guidance for 2024? Or is it an add-on to the PHP 1.5 billion? I think this is about the cost, the OpEx.

So they are 2 different things. The PHP 1.5 billion is what our cost will be for the rest of the year. But I think moving forward, we expect to retain also PHP 1.5 billion, correct me if I'm wrong, Carl, is that the number we're looking at? That will be like the run rate for the additional cost. So they are slightly different nubers.

And then the second question from Joana is, are you able to provide ECL sensitivity for every 1% increase in Union Digital?

Carl, you have those numbers?

Yes. So Joanna, we will just reply to your question via e-mail. Moving on, the next question comes from [indiscernible] Capital. His question is, I noticed there's been considerable turnover among Union Bank's management per the PSC announcements. Can you provide some more insight into the seemingly high turnover? And how much of this is related to the Citibank acquisition?

That is something we've actually been discussing because for us, we actually disclose any resignation or movement, AVP and above, which is a large number of people in Union Bank. So maybe we should be considering a smaller subset. But we feel that most of these resignations are not material and actually part of the normal transition. In fact, if you look at the total number of resignations over the last 2 months in PSC Edge, which is about 20 to 25 names, 11 of which are just organizational changes, such as -- most of those actually were people who were running our trust business within Union Bank, but because we've already set up our stand-alone trust company, technically, they resigned and moved. So that's already roughly half of the resignations that have been disclosed. Another one is Dr. David Hardoon, who is a significant person within our organization. But he's actually moved on to AEV, the Aboitiz Data Innovation, which is now serving the whole group, including Union Bank. So he continues to be a consultant for Union Bank. So the remainder, which is not very big, are probably just typical resignations. Off hand, I think the numbers are less than -- roughly 0.2% of all of our head count of the parent. So remember, we have 5,500 employees, almost 8,500 when you include the subs. So I think we have to take that in context. So yes, so is it alarming for us? We've actually also added new people along the way. I think one of the recent announcements was we -- from Citibank, Mukul has joined us. So that's a big addition for us. So I think fair to say no significant -- nothing which will have a significant impact for us.

Okay. So the final question we have that was sent in was really just more on the SRO. Could you just -- what is the time table for the PHP 10 billion SRO announcement? Just the time table.

Yes. So we've already started working on it. We've already made the submissions to the PSC and SEC and we probably -- our timetable -- and again, correct me if I'm wrong, Carlo, is towards the end of May or early June. So definitely before the end of the first half.

Okay. Thank you for that. So before we close the Q&A portion, I would just like to check our audience if there are any -- there's anybody who would like to ask a question or maybe our Zoom participants as well. If not, then maybe we'd like -- thank you very much. Thank you, Dmi. Thank you, Johnson, for being here. Thank you, everyone. This ends our 2023 full year earnings briefing for Union Bank. For the benefit of those who missed part of the session and would like to rewatch the briefing, a video of this event will be uploaded in our website. Before we end, again, on behalf of Dmi Johnson, the Investor Relations team and the entire presentation development team, we would like to thank everybody for joining us today. For those of you who will be joining us for then Aboitiz Power briefing, see you here at 4:00 p.m. later. And for the rest of you, see you all again on the first quarter briefing this April. So until then, goodbye for now.