the Outsider - PSE Points to Ponder

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 ...

  Higher rates fattened RCBC’s lending spread. They also punished the value of its bond book. For banks, higher interest rates are both tonic and toxin. They can widen the gap between what a lender earns on loans and securities and what it pays depositors. But they can also bruise the value of bonds already sitting on the balance sheet. RCBC’s first-quarter 2026 results captured that paradox neatly. Yuchengco’s bank reported net income of ₱2.7 billion , up 11.6% year on year , as net interest income surged. Yet its total comprehensive income was only ₱223 million , sharply reduced by a ₱2.54 billion fair-value loss on debt instruments classified at fair value through other comprehensive income, or FVOCI .  The profit-and-loss account told the cheerful half of the story. RCBC’s net interest income rose to ₱15.4 billion from ₱12.3 billion , an increase of about 25% . Its net interest margin improved to 5.2% from 4.8% , a substantial move in a business where margins are usually m...