UnionBank, Philguarantee to help SMEs

MANILA, Philippines — Aboitiz-led Union Bank of the Philippines (UnionBank) has partnered with state-run Philippine Guarantee Corp. (Philguarantee) for a program to help small businesses survive the impact of the pandemic.

Under the agreement, Philguarantee would cover 50 percent of new and incremental MSME loan exposure for UnionBank, allowing the bank to continue lending to a wider base for small companies severely affected by the health crisis.

With this, UnionBank continues to pursue its transformational journey in supporting as many small enterprises to grow their businesses through digital solutions and alternative credit underwriting which may have been put on hold during these challenging times.

Meanwhile, this collaboration aligns with Philguarantee’s role to encourage the banking sector to continue lending to MSMEs under the government’s economic recovery program due to the pandemic.

Earnings of UnionBank slipped by six percent to P4.5 billion in the first half from P4.79 billion in the same period last year as provision for credit losses amounted to P6.99 billion, more than 19 times last year’s P364 million.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that loans extended by banks to MSMEs, as well as large enterprises that are booked in compliance with their reserve requirements, soared close to P100 billion as of July 23.

The rising amount indicates that banks have continued to grant new loans or re-finance existing ones to MSMEs and large enterprises even through the quarantine to prevent further spread of the deadly COVID-19.

A total of 97 banks extended loans to MSMEs as an alternative mode of compliance with the RRR with an average daily balance of P84.2 billion, while 13 banks provided loans to large enterprises as an alternative mode of compliance with the RRR amounting to P12.3 billion.

As part of regulatory relief measures extended to banks, the Monetary Board allowed banks to use additional loans to MSMEs, as well as large enterprises severely affected by the pandemic, as alternative compliance to the RRR until the end of 2022.