RCBC vs UBP Q1 2026 Results: How Rising Interest Rates Hit Yuchengco and Aboitiz Banks Differently
In banking, interest rates are not simply a blessing or a curse. They come as a bargain. Wider margins can fatten the income statement, while the same market forces can bruise the balance sheet through bond losses that sit quietly in other comprehensive income. In the first quarter of 2026, that bargain looked much kinder to Aboitiz-backed Union Bank of the Philippines than to Yuchengco-led Rizal Commercial Banking Corporation. UBP reported ₱3.83 billion in net income, up 167 percent from a year earlier, while RCBC posted ₱2.7 billion, up 11.6 percent.
The contrast was not that RCBC failed to benefit from the rate environment. It did. The bank’s net interest income rose 25 percent to ₱15.4 billion, a strong performance driven by better yields and a sharp decline in interest expense. Its net interest margin improved to 5.2 percent, from 4.8 percent at year-end 2025. But the improvement came with a visible shadow: RCBC’s capital funds fell partly because of a ₱2.54 billion lower valuation of FVOCI investments, a mark-to-market drag nearly as large as the quarter’s reported profit.
UBP’s quarter had its own blemishes, but they were easier to absorb. Its net interest margin reached 6.7 percent, compared with 6.3 percent a year earlier, as interest expense declined to ₱4.45 billion from ₱5.40 billion. Net interest income rose to ₱16.76 billion, and provisions for credit losses fell 18 percent, giving the bank a cleaner path from revenue to earnings. UBP also recorded mark-to-market pressure, including ₱1.28 billion in unrealized FVOCI losses, but the hit was smaller relative to its balance sheet and capital base.
That is the essential difference between the two banks. UBP was the cleaner beneficiary of the rate environment: wider spreads, lower funding costs, stronger earnings, and relatively contained FVOCI damage. RCBC was more exposed on the OCI and capital side: its core lending engine improved, but its much larger FVOCI portfolio made rising yields more painful for equity. RCBC’s FVOCI assets stood at ₱140.2 billion, compared with UBP’s ₱41.6 billion.
The bond-book gap matters. RCBC’s FVOCI portfolio was equivalent to roughly 94 percent of its capital funds, while UBP’s was only about 21 percent of its capital. That means the same move in market yields can leave a much larger mark on RCBC’s book value. RCBC’s capital adequacy ratio fell to 13.2 percent from 14.5 percent, while its CET1 ratio dropped to 12.3 percent from 13.6 percent. UBP’s capital ratios also declined, but from a stronger position: CAR stood at 14.6 percent, and CET1 at 13.8 percent.
RCBC’s quarter was therefore a story of strength diluted by sensitivity. Its traditional banking franchise continued to expand: deposits rose to ₱1.06 trillion, while net loans and receivables reached ₱811.0 billion. Its cost-to-income ratio of 54.3 percent was also better than UBP’s 57.4 percent, suggesting a leaner operating profile. But higher impairment provisions, which jumped 62 percent to ₱4.7 billion, largely offset the benefit from stronger spread income.
UBP, by contrast, looked like a bank whose earlier pressure points were finally easing. Its total resources rose to ₱1.18 trillion, net loans increased to ₱553.6 billion, and deposits reached ₱751.7 billion. The bank’s performance was supported not only by margin expansion but also by lower credit costs and other income, including foreign-exchange-related gains, even as trading and investment securities resulted in a ₱136 million loss.
Still, UBP’s advantage was not costless. Its deposit mix weakened as its CASA ratio fell to 65.1 percent from 68.1 percent at year-end 2025, with time deposits growing faster than cheaper demand and savings deposits. That raises a question for the rest of the year: whether lower funding costs can persist if customers continue migrating toward higher-yielding deposits.
For investors, the comparison is less about which bank “won” the quarter and more about the character of each bank’s exposure. UBP showed better earnings conversion: higher NIM, stronger ROA, stronger capital, and sharply faster profit growth. RCBC showed balance-sheet scale and operating efficiency, but its much larger FVOCI book made capital more vulnerable to market-rate movements.
The first quarter, then, offered a study in rate-cycle asymmetry. Both banks enjoyed the income benefit of repricing. But only one emerged with the cleaner trade. For UBP, the rate environment widened the spread and left manageable scars. For RCBC, it widened the spread, too — but the bond book bled through equity.
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Disclaimer: This is for informational purposes and is not investment advice. Figures are taken from company disclosures and exchange data; valuation ratios include the author’s calculations based on cited inputs.
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