Union Bank allots P2 billion capex for 2021

MANILA, Philippines — Union Bank of the Philippines has allocated at least P2 billion for capital expenditures this year, as well as to fund the construction of an innovation hub to future-proof its business.

The planned five-story innovation campus features state-of-the-art facilities such as operational and information technology (IT) command centers, security monitoring rooms, modern learning spaces, collaboration areas, cafeteria, dormitories, as well as health and wellness facilities.

“The bank allocated more than P2 billion in capital expenditures in 2021 primarily intended to further accelerate and enhance digital capabilities, as well as construct an innovation hub,” UnionBank said in a disclosure to the Philippine Stock Exchange (PSE).

With the proposed hub, customers are assured of uninterrupted service in case of disasters and crises affecting the main office in Pasig City, similar to the seamless transition to a work-from-home set-up since the onset of the COVID-19 pandemic.

The Aboitiz-led bank set aside P1.58 billion for its capital expenditures last year, 38 percent lower than the previous year’s P2.55 billion.

The publicly held bank has 197 branches, including digital and paperless branches called Arks located within and outside Metro Manila.

The group’s network also includes 149 branches of CitySavings Bank, 15 branches of First-Agro Industrial Rural Bank (FAIRBank) mainly located in the Visayas region, 24 Luzon branches of Bangko Kabayan Inc., three branches of Progressive Bank Inc. and more than 3,000 branches of PetNet Inc.

Last year, UnionBank’s net income declined by 17.1 percent to P11.6 billion from a record P14 billion in 2019 on the back of almost a five-fold jump in provisioning for probable loan losses due to the impact of the pandemic.

The bank’s allowance for soured loans amounted to P8.7 billion last year, 4.7 times the P1.9 billion recorded in 2019 as its non-performing loan (NPL) ratio increased to 5.1 percent from 3.1 percent due to the impact of the pandemic on the capacity of borrowers to pay their financial obligations.

UnionBank’s asset base was steady at P774.5 billion last year from P770.9 billion in 2019, resulting in a capital adequacy ratio of 17 percent and a common equity tier-1 ratio of 15 percent, both above the threshold set by the Bangko Sentral ng Pilipinas (BSP).