UnionBank targets P20 billion from SRO or private placement

SINGAPORE – Aboitiz-led Union Bank of the Philippines is raising as much as P20 billion to grow its digital bank as well as its retail banking business after it acquired the consumer banking segment of global banking giant Citi.

In a disclosure, UnionBank said the planned fund raising activity could be in the form of a stock rights offering (SRO) to existing shareholders or through a private placement.

UnionBank president and CEO Edwin Bautista told The STAR on the sidelines of the Singapore Fintech Festival that the proceeds of the latest round of fund-raising activity would be used to further grow its retail banking segment and expand its newly launched Union Digital Bank.

Just last May, the Aboitiz-led bank raised P40 billion through a stock rights offering to partially fund the acquisition of the retail banking business of global banking giant Citigroup Inc. in the Philippines.

Last December, UnionBank said it was shelling out around P55 billion for the so-called “deal of the year” involving the acquisition of Citi’s retail banking business in the Philippines.

The listed bank ended up spending P72 billion as the net asset value as of end June stood at P26.7 billion plus a premium of P45.3 billion.

Originally, the net asset value of the retail banking business was only about P9.7 billion when the deal was announced last December.

Last June, UnionBank raised P11 billion after investors swarmed the first-ever digital peso bond issuance in the Philippines.

The fund raising activity, part of the bank’s P39 billion bond program, was oversubscribed as it originally pegged the size at P1 billion.

“This year, we made significant headways toward our aspiration of becoming a Great Retail Bank,” Bautista said.

Bautista said that consumer loans now account for 52 percent of the bank’s total loan book, which is more than double the industry average.

“Our retail customer base has doubled in the past three years mainly coming from our digital account opening and cash management ecosystems. We are seeing strong momentum in terms of new-to-bank customer acquisition. All these milestones have set us up for continued strong growth in the retail market,” Bautista said.

Meanwhile, UnionBank reported a net income of P10.1 billion in the first nine months, translating to a return on equity of 10.4 percent, which takes into consideration the impact of the additional capital of P40 billion from its stock right offering last May.

For the third quarter alone, the bank’s profit grew by 17 percent to P4 billion from P3.4 billion in the previous quarter.

Net revenues excluding trading gains jumped by 37 percent to P36 billion.

Quarter-on-quarter, this was higher by 23 percent to P14.2 billion.

Net interest margin also increased to 4.9 percent from 4.6 percent in the same period last year coming from the expansion of earning assets and higher CASA ratio.

The bank’s loan book surged by 37 percent to P449 billion, while CASA posted a record-high 31 percent growth to P417 billion.

Fee-based income surged by 64 percent to P5.1 billion, driven by customer fund transfers and card transactions, bancassurance fees and forex income.

As of end-September, UnionBank has crossed the P1 trillion mark in terms of assets for the first time, with total assets at P1.05 trillion, higher by 37 percent year-on-year.

“We have successfully closed the acquisition of the Citi consumer business and became the legal owner of the portfolio last Aug. 1, 2022. The transaction added P98 billion of total assets to the Bank, including P65 billion in net loans and P30 billion in cash. It also included P67 billion in deposits with a CASA ratio of 89 percent. We are confident that the integration would be seamless as 1,500 former Citi employees, including 100 percent of the senior management of the consumer business, have joined UnionBank,” UnionBank chief finance officer Jose Emmanuel Hilado said.