Union Bank Funnels Additional ₱2 Billion in Capital for Upcoming Digital Bank

Union Bank of the Philippines recently invested an additional ₱2 billion in additional capital to its digital bank arm in its continued effort to launch UnionDigital Bank Inc. The bank’s board of directors has approved the capital infusion, according to a Philippine Stock Exchange (PSE) disclosure. UnionDigital Bank is among the entities that have been granted digital banking licenses by the Monetary Board. Other digital banks with licenses include UNO Digital Bank, GoTyme, Maya, Overseas Filipino (OF) Bank, and Tonik Bank.

Edwin Bautista, Union Bank President, and CEO noted that its digital arm is the bank’s attempt to tap the Philippines’ retail segment digitally and cost-effectively. “Our digital bank UnionDigital, is also on track to launch by the second half of the year,” Bautista affirmed. “We are closely working with the regulators to complete key requirements for the start of our operations.”

Earlier in November, the Securities and Exchange Commission (SEC) approved the Articles of Incorporation and By-Laws of UnionDigital Bank. Under this, UnionBank subscribed to 100 million new common shares of its digital arm at ₱10 per share. The rise of digital banks plays a significant role in improving access to financial products, especially for micro, small, and medium enterprises (MSMEs).

Union Bank’s net income fell to ₱2.6 billion during the first quarter of the year. This accounted for a 44.7% drop compared to its ₱4.7 billion net income in the same period of the previous year. Nonetheless, the firm remains confident in sustaining the momentum of its recurring income. From January to March, its recurring income grew by 21%.

“While the ongoing Russia-Ukraine conflict could adversely affect investor and consumer sentiment, we think that the country’s economic fundamentals are strong enough to weather the challenges ahead,” elaborated Union Bank treasurer and corporate planning services head Jose Emmanuel Hilado. “We, therefore, remain optimistic that improving credit appetite and spending patterns will allow us to sustain momentum in our recurring income for the rest of 2022.”

Moreover, the total assets of Union Bank rose by 13% in the first quarter. It reported ₱844.4 billion in total assets compared to ₱747.3 billion in the same quarter last year. “The optimism generated by the reopening of the economy is palpable and if the pandemic is behind us, we are hopeful that the economic gains since 2021 are sustainable,” added Hilado, noting confidence in the country’s economic recovery.

Source: PhilStar