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Friday, April 19, 2024

AUB: Low interest rates to lift AUM

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Asia United Bank (AUB) has expressed confidence that the assets under management (AUM) of its trust business will post double-digit growth this year on the back of improved economic and investing conditions.

AUB said it expects the AUM of its trust business to rise by 20 percent to P32 billion this year. AUB Senior Vice President and Head of Trust Andrew Chua said this expectation is attributed to last year’s surge in liquidity.

“With interest rates inching to all-time lows, more clients turned to unit investment trust funds (UITFs) to park their excess funds…. Investors will continue to flock to fixed income assets this year, as these provide a steady flow of income,” Chua said.

In 2020, AUB posted a 12-percent increase in total AUM to P26.4 billion from the previous year’s P23.7 billion. AUB attributed the growth to the Bangko Sentral ng Pilipinas’ (BSP) loose monetary policy which enabled the bank to generate returns higher than deposit rates through investments.

As of June this year, the BSP’s total liquidity infusion in the country reached a total of P2.2 trillion. This amounted to 12.13 percent of the country’s full-year nominal GDP for 2020.

Last year, the BSP reduced the country’s policy rate by a cumulative 200 basis points and cut reserve requirement ratios by 200 basis points for universal and commercial banks and non-bank financial institutions with quasi-banking licenses, as well as by 100 basis points for thrift banks and rural/cooperative banks.

Chua also said that while interest rate remains low, inflation is a threat to investor gains this year as it continues to trend above the government’s target range of 2 to 4 percent.

“Despite the volatile nature of equities, we still believe that over the medium- to long-term horizon, they will still provide growth ranging from 8 percent to 10 percent. Mixing this with fixed income will definitely enhance and protect investors from inflation.”

Read full article on BusinessMirror

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