UNIONDIGITAL BANK, Inc., the online banking arm of listed Union Bank of the Philippines, Inc. (UnionBank), targets to grow its loans to P39 billion this year as it plans to launch new products and features amid an expected growth in customers.
“Throughout the year, we are excited to unveil a diverse array of new products and features, including an enhanced portfolio of loan options and the introduction of virtual cards,” UnionDigital Bank said in an e-mail.
The bank had a gross loan portfolio of P13.9 billion at end-2023, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The online lender currently offers cash loans on its app as it looks to boost underserved and unbanked communities’ access to credit products.
Applications for cash loans do not have any prerequisites and do not need collateral.
UnionDigital Bank also uses alternative credit scoring methods to increase the chances of approval and help customers establish their credit histories, it said.
“This approach not only broadens financial inclusion but also paves the way for building our customers’ credit scores,” the digital bank said.
The Aboitiz-led digital lender is also aiming to grow its customers to 1.5 million this year from its current 750,000, it said.
The bank said it achieved profitability last year, with its loan-to-deposit ratio standing at 69%, up from 58% in 2022.
“We are the first digital bank in the Philippines to achieve profitability in 2023. As of December 2023, we attained a substantial 65% market share in loan portfolio size, while in deposit, we ranked second among digital banks, with a commendable 25% share,” the lender said.
UnionDigital Bank’s revenues also grew by 13 times to over P5 billion last year, it earlier said.
Its assets stood at P22.47 billion at end-2023, BSP data showed.
Meanwhile, its parent UnionBank saw its net income decrease by 28% to P9.07 billion in 2023 due to one-time integration costs related to its acquisition of Citigroup, Inc.’s consumer business in the Philippines.
UnionDigital Bank is one of six licensed online lenders in the country, along with GoTyme Bank, Tonik Digital Bank, Inc., Maya Bank, Overseas Filipino Bank, and UNObank.
The central bank earlier said only two digital lenders posted a net profit in 2023. The digital banking sector posted a combined net loss of P4.38 billion in 2023, BSP data showed, with total assets at P88.69 billion. As of end-February, the industry’s assets stood at P91.55 billion.
The BSP has capped the number of digital banks in the country at six since 2021 as it wants to foster competition and monitor developments in the sector.
BSP Eli M. Remolona, Jr. last year said they could lift the moratorium on the grant of new licenses “pretty soon” as more entities have expressed interest in entering the market.
UnionDigital Bank said allowing more online banks to operate in the Philippines will increase competition in the sector.
“This environment encourages existing digital banks, including us, to continuously enhance our offerings, streamline user experiences, and adopt new technologies to remain competitive. For UnionDigital, the evolving landscape represents both challenges and opportunities. The entrance of new players could pressure existing digibanks to innovate more quickly and efficiently to retain and grow their customer base. However, it also presents an opportunity for us to differentiate ourselves by leveraging on our existing strengths, particularly our solid foundation with UnionBank as our parent company and the expansive network within the Aboitiz Group supporting us,” it said.
“For us, the key to success will lie in our ability to adapt to the changing industry dynamics, invest in technology and innovation, and maintain a customer-centric approach. This will not only help us navigate the challenges but also seize the opportunities presented by the expansion of the whole Philippine digital banking ecosystem,” UnionDigital Bank added. — A.M.C. Sy
