Fintech leader UnionBank sees boost from tie-ups

Union Bank of the Philippines (UnionBank) expects higher earnings this year, following a double-digit growth in loans from partnerships with financial, technology and transport firms.

“In 2023, we witnessed a major shift in our business model. We now boast the fourth largest loan portfolio among all the banks,” UnionBank president and chief executive officer Edwin Bautista said during the bank’s virtual annual stockholders meeting on Friday.

UnionBank consistently expanded its client base to 14 million or 2 million new clients annually since 2019, driving growth in consumer loans last year by 33 percent on a compounded annual growth rate.

“Consumer loans account for 58 percent of the bank’s total portfolio,” Bautista said.

Citi’s credit cardholders, he said, provided a boost after acquiring Citi’s consumer business in 2022.

“The good news is we have completed the integration and migration of Citi business in April,” he shared.

Costly Citi acquisition

“The first three months showed we even had a higher acquisition rate of 50,000 new cards monthly,” Bautista continued.

Last year, UnionBank posted P9.2 billion in profit, down from the 2022 level due to integration costs for Citi. 

With Citi, however, Bautista said UnionBank secured the third place among the active cards and gross billings among all local banks.

Bautista said UnionBank is poised to climb up the ranks as it offers diversified services to previous Citi clients.

“In addition to cost savings, the migration will enable the bank to enhance services to Citi customers with features such as real-time digital account opening, free ATM withdrawals anywhere in the world, and expanded branch access,” he explained.

Apart from this, Bautista said UnionDigital Bank, UnionBank’s digital lender, has continued to draw clients for loans and savings since the parent bank launched it in 2022.

“UnionBank online is the most downloaded and highest rated app in Google Playstore, with over 100,000 downloads,” he noted.

“To ensure success, UnionBank will integrate traditional products into its mobile platform, reaching out to underserved and unbanked Filipinos,” Bautista added.

Widening its reach, UnionBank also teamed up with motorcycle taxi firm Angkas.

“Its collaboration with Angkas will bring banking services to about 200,000 motorcycle drivers in Metro Manila,” Bautista said.

Tapping resources of technology-focused partners, he said UnionBank will intensify deployment of digital tools to expand and design products and services while ensuring they will be delivered to customers safely.

“We will maintain our lead in the development of financial technology particularly in the following areas: artificial intelligence, distributed ledger technology applications, support for the  Bangko Sentral ng Pilipinas’ open finance network, and digital currency,” Bautista shared.

Open finance allows sharing of customers’ data from banks, financial firms and third-party providers to create innovative and inclusive financial products. It is mandated by the central bank’s Circular 1122 issued in 2021.

Robust economy

UnionBank’s chief financial officer Manuel Lozano said the economy could grow by 5.8 percent this year from 5.6 percent in 2023 as the bank’s “hopeful” but “realistic” view.

“Jobs in factories and services, money sent from abroad and tourism should help this growth. The government is also spending on big infrastructure projects and they have big investments lined up for that area,” he said.

However, he said inflation risks remain which could encourage controlled spending among households and businesses.

“Unfortunately dry weather will hurt farming output. Overall, though, we expect things to improve and inflation to settle down within a healthy range by the end of this year,” Lozano said.

The central bank aims to stabilize inflation close to 2 percent out of its 4 percent maximum target.

Inflation rose again to 3.7 percent in March from 2.8 percent in January, according to the Philippine Statistics Authority.