UnionBank to scale up retail business this year

MANILA, Philippines — Union Bank of the Philippines is further growing its retail business and enhancing its profitability this year, along with unlocking the full potential of the acquired consumer segment of Citi and maintaining the growth of its digital bank.

During the annual stockholders’ meeting of the Aboitiz-led bank, UnionBank president and CEO Edwin Bautista said 2024 would be a pivotal year as it aims to become a great retail lender.

“With our large base of retail clients, we are strategically positioned to capitalize on cross-selling opportunities across our wide array of financial products including credit cards, mortgages, personal loans and vehicle loans,” Bautista said.

“This approach allows us to reach our established customer base in a more targeted and cost-effective manner, thereby ensuring that we meet their financial needs,” he added.

According to Bautista, the bank’s consumer loans have been growing at an average of 33 percent since 2020, making up 58 percent of the bank’s total loans.

“The growth of consumer loans will therefore expand our net interest margin and allow us to continue delivering strong top-line revenues in the coming years. By effectively executing our key focus areas, we will enhance the bank’s profitability, leading to a stronger and more profitable Union Bank,” Bautista said.

The listed bank will also delve deeper into the developments of its financial technology, particularly in artificial intelligence applications in banking functions, distributed ledger technology applications and supporting the central bank’s open finance framework.

The bank will also look at developments on digital currency and “catch it before it becomes mainstream in the banking world,” he said.

Unlocking the full potential from the takeover of the retail banking business of global banking giant Citi in the Philippines will also be a priority of the bank this year, according to Bautista.

“Notably the Citi consumer business has consistently exceeded our own expectations. In 2023 we onboarded 23,000 new credit card clients monthly, a threefold increase from previous years,” he said.

“This growth has elevated our credit card portfolio to third place among both active card base and gross billings across all the banks in the country.”

In the first quarter, Bautista reported that UnionBank’s credit card acquisition rate rose to 50,000 new cards monthly.

“The business now contributes approximately one-third of the bank’s revenue. Post-migration, the business can easily double its performance,” he said.

The Aboitiz-led bank will also sustain the growth of UnionDigital in the digital banking industry as it emerged as the market leader in 2023, Bautista said.

“UnionDigital ranked as the most profitable digital bank in the country and registered the highest market share in terms of total loans extended,” he said.

The digital bank will also broaden its reach by venturing into new collaborations this year such as its partnership with motorcycle ride-hailing platform Angkas, which would bring banking services to 200,000 motorcycle drivers in Metro Manila.

“To guarantee the success of these partnerships Union digital will integrate traditional banking products into its mobile platform reaching out to underserved and unbanked Filipinos,” Bautista added.

The profit of UnionBank fell by 27.8 percent to P9.2 billion in 2023 from P12.74 billion in 2022 on the back of higher provisioning and integration costs from its acquisition of Citi’s consumer business in the Philippines.