UnionBank bullish amid boost from Citi deal, consumer sector

UNION BANK of the Philippines, Inc. (UnionBank) expects a better performance this year as it has completed the integration of Citigroup, Inc.’s consumer business into its operations and as it continues to scale up its consumer segment.

The bank completed the migration of Citibank’s consumer business last month, UnionBank President and Chief Executive Officer Edwin R. Bautista said during the lender’s annual stockholders’ meeting on Friday.

“This means that we will no longer incur the transition service costs that we pay Citibank starting April of this year onwards,” he said.

UnionBank’s attributable net income fell by 28% last year to P9.07 billion due to one-time costs related to the Citi transaction.

The bank can now provide former Citi customers with new features, including real-time digital account opening, free ATM withdrawals globally, expanded branch access, and improved offerings, Mr. Bautista said.

“Priority number one is to unlock the full potential of the acquired Citibank consumer banking business… Notably, the Citi consumer business has consistently exceeded our own expectations,” he said.

UnionBank saw its monthly onboarded credit card clients triple to 23,000 last year, Mr. Bautista said.

In the first quarter, UnionBank’s credit card acquisition rate rose to 50,000 new cards every month, he added.

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

The Aboitiz-led bank will also continue to scale up its retail business to expand its net interest margin as it looks to capitalize on cross-selling opportunities across its financial products, he said.

“Furthermore, our consumer loans have been growing at an impressive 33% based on a three-year compounded annual growth rate since 2020. And currently, they make up 58% of our total loans,” Mr. Bautista added.

The bank will continue to invest in financial technology, such as artificial intelligence, distributed ledger technology, and digital currencies, to support its retail business, he said.

UnionBank will also integrate more traditional banking products into their online arm UnionDigital Bank to reach the unbanked, he added.

ECONOMIC GROWTH
Meanwhile, UnionBank Chief Financial Officer Manuel R. Lozano said the bank expects Philippine gross domestic product to grow at around 5.5% to 5.8% this year, driven by consumer spending and investments.

“Jobs in factories and services, money sent home from abroad, and hopefully better tourism should all help this growth. The government is also spending on public infrastructure projects and there are big investments lined up in that area,” he added.

However, growth could be stifled by El Niño as it will hurt farming output, he said.

“Overall, though, we expect things to improve and inflation to settle down within a healthy range by the end of this year,” Mr. Lozano added. — Aaron Michael C. Sy