UnionBank sees strong consumer lending growth

MANILA, Philippines — Union Bank of the Philippines sees a strong growth in its consumer lending this year despite the aggressive rate hikes delivered by the Bangko Sentral ng Pilipinas (BSP) to fight inflation and stabilize the peso.

Manoj Varma, consumer banking head at UnionBank, said during the unveiling of four new credit cards that the Aboitiz-led bank is looking at a 20 to 25-percent growth in its consumer lending business this year.

According Varma, UnionBank’s consumer lending portfolio is   growing by 25 percent due to revenge spending, revenge travel and the expected economic recovery after a slowdown in the second quarter of the year.

“So we are growing very strong double digits depending on which product do you look at. If you look at cards and loans, we are growing 20 to 25 percent. That’s also happening industry-wide because there is a spending revenge, travel that is happening so we are benefiting this year,” he said.

According to Varma, the  bank is also benefitting from the low base effect the previous year as loan growth was suppressed due to the impact of the COVID  pandemic.

For 2024, Varma said the growth was seen tapering off to a range of 10 to 15 percent.

“Because of the high base effect, it might come down to 10 to 15 percent, but its still very strong,” Varma said.

UnionBank sees the country’s gross domestic product (GDP) growth accelerating to a range of 4.5 to 4.7 percent in the third quarter   after slowing to 4.3 percent in the second quarter from 6.4 percent in the first quarter.

“Surprisingly, the economy is pretty resilient. It is still growing 4.5 to five percent, the unemployment is pretty good, the manufacturing indicators are strong, consumption is strong, OFW remittances are quite strong,” Varma said.

The   bank believes that the economic growth will slow down to about five percent this year, way below the six to seven percent growth target penned by economic managers.

Varma believes the BSP Monetary Board is set to deliver another rate hike to tame inflation.

The BSP has maintained a hawkish pause for four straight rate-setting meetings in May, June, August and September as inflation eased for six straight months to 4.7 percent in July from a peak of 8.7 percent last January, while the peso bounced back to the 53 to $1 range in February.

However, BSP Governor Eli Remolona Jr. signaled a possible off-cycle rate hike within the week as inflation accelerated for two consecutive months to 5.3 percent in August and 6.1 percent in September.

The Aboitiz-led bank also unveiled four new credit cards to cater to the different needs and lifestyles of the customers.

“We are happy to unveil the re-launch of your Citi credit cards under the UnionBank brand. We are keeping true to the promise we made to our clients that they will continue to enjoy their current product benefits, but I am delighted to share that we are not stopping there! Our customers can expect even bigger and better things with their re-branded UnionBank cards,” Varma said.

UnionBank spent P72 billion to complete the acquisition of the consumer banking business of global banking giant Citigroup in the Philippines last year.

Carissa Sindiong, cards products head at UnionBank, said the four new cards include the UnionBank Rewards Card, UnionBank Cash Back Card, UnionBank Miles+ Card and UnionBank Reserve Card.

“We are excited to bring these new UnionBank Credit Cards to the market because our customers will have more options when they look for a card that best suits their lifestyle. Plus, with these cards, they will get to enjoy unbelievable rewards, promos, and experiences,” Sindiong said.