In a significant development for the Philippine banking industry, the Bangko Sentral ng Pilipinas (BSP) has granted its approval for Union Bank of the Philippines (UnionBank) to make an additional equity investment of up to P900 million in its wholly owned subsidiary, UnionDigital Bank Inc. This strategic move comes as part of UnionBank’s efforts to support business growth and bolster its capital position, ensuring the sustainability of UnionDigital’s impressive growth trajectory.
UnionBank’s Vision for UnionDigital
UnionBank’s Board of Directors, during a pivotal meeting on June 23, 2023, unanimously approved the plan to infuse more capital into UnionDigital Bank Inc. This decision reflects UnionBank’s unwavering commitment to strengthening its digital banking arm and expanding its range of services. With the newly approved capital infusion, UnionDigital is poised to further its mission of revolutionizing the digital banking landscape in the Philippines.
Capital Injection Details
The cash infusion, amounting to P900 million, will be realized through UnionBank’s subscription to 90 million new shares at P10 per share. This subscription equates to approximately 23.07 percent of UnionDigital’s outstanding capital stock. The move is expected to boost UnionDigital’s expansion initiatives significantly, with a particular focus on enhancing its digital lending capabilities, soon to be available through the UD app.
Digital Loans and the UD App
The infusion of fresh capital into UnionDigital Bank Inc. will enable the UD app to expand its digital loan offerings, thereby providing customers with faster access to credit and a streamlined loan application process. The UD app is set to play a pivotal role in UnionBank’s mission to serve a diverse range of customers, including those with limited financial means who fall at the base of the income pyramid.
UnionDigital’s Financial Performance
UnionDigital Bank Inc. reported profitability during the first quarter of 2023, underpinned by its innovative ecosystem-led business model. This success underscores UnionBank’s confidence in UnionDigital’s strategic growth plan and robust financial performance. With this approved funding, UnionBank aims to leverage its strength to further accelerate growth and enhance its ability to cater to the financial needs of its customers.
UnionDigital Bank’s President and CEO, Henry Aguda, expressed enthusiasm about the funding approval, stating, “This approved funding indicates UnionBank’s confidence in our strategic growth plan and strong financial performance.” He further emphasized, “We will use this to fuel our growth trajectory and allow us to better serve the financial needs of our customers.”
Empowering the Base of the Pyramid
Notably, nearly 70 percent of Union Bank Digital’s customer base comprises individuals with limited financial resources, situated at the base of the income pyramid. Henry Aguda underscored the significance of this demographic, stating, “These are the people we want to help and include in the financial system.” UnionBank’s investment in UnionDigital is not only a strategic move but also a commitment to fostering financial inclusion and economic empowerment at all levels of society.
The approval of a P900-million equity investment by Union Bank of the Philippines in its subsidiary, UnionDigital Bank Inc., represents a pivotal moment in the evolution of digital banking in the Philippines. UnionBank’s commitment to supporting UnionDigital’s growth, particularly in the realm of digital loans, showcases its dedication to innovation and financial inclusion. As UnionDigital continues to expand and develop its services, it holds the potential to transform the lives of millions of Filipinos, providing them with access to essential financial resources and opportunities for economic advancement.
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