UnionBank expects strong loan growth amid boost from Citi acquisition

UNION BANK of the Philippines, Inc. (UnionBank) expects its loans to post strong growth, driven by its recent acquisition of Citigroup Inc.’s local consumer unit and the growth of its digital bank.

UnionBank President and Chief Executive Officer Edwin R. Bautista told reporters on the sidelines of the Aboitiz Data Innovation’s AI Summit that they expect their loans to grow by thrice as much as the expansion in the market.

“Citibank is growing at 30-50% year on year since its acquisition. It’s phenomenal. Citi was more conservative in who they wanted to get as customers. It had a very high threshold on who can because they don’t have the products to sell to the lower end to make it profitable, whereas we do. That’s the difference,” Mr. Bautista said.

UnionBank’s acquisition of Citi’s Philippine consumer banking business was completed in August 2022.

The transaction, valued at P55 billion, covers Citi’s credit card, unsecured lending, deposit and investment businesses, as well as Citicorp Financial Services and Insurance Brokerage Philippines, Inc., which provides insurance and investment products and services to its retail clients.

Mr. Bautista said getting Citi’s one million customers allowed UnionBank to offer mortgages and auto loans to a new market.

Citi’s card products also boosted its variety of offerings, as Citi cards have features that UnionBank did not have previously, he said.

Mr. Bautista added that UnionDigital Bank is seen to grow by high double digits as its consumer loans have yet to peak.

The digital lender’s strategy of prioritizing loans instead of deposits was key to making it profitable within less than a year of operating, he said.

“Our approach is different. We lead with loans, and we only get deposits to the extent that we need it to fund the loans,” Mr. Bautista said.

UnionDigital was granted a digital banking license by the Bangko Sentral ng Pilipinas in July 2021. It began operating in July 2022.

Mr. Bautista said UnionDigital disbursed P3 billion in consumer loans at end-April, up from P2.8 billion as of March and P2.5 billion at end-February.

UnionDigital Bank Chief Commercial and Revenue Officer Mike Singh said the digital bank is looking to use the Aboitiz ecosystem and strategic partnerships to expand its customer base.

“Our scalability is much more significant compared to traditional neobank that’s going after one customer at a time through Facebook or Google ads,” Mr. Singh told BusinessWorld at the sidelines of the same event.

“We’re looking at the second half of the year to launch these partnerships. Right now, we’re doing small pilots because the products are not fully built,” he added.

UnionBank’s net income went up 30% year on year in the first quarter to P3.4 billion amid gains from its acquisition of Citi’s consumer business in the country.

The bank’s shares closed at P79.65 apiece on Wednesday, up by 45 centavos or 0.57%. — AMCS