ABC Story: Tech Up Pilipinas! Leveraging UnionBank’s Digital Transformation for social good
December 12, 2023
BANKING & FINANCIAL SERVICES: RESULTS OF OPERATIONS
December 12, 2023
It was a challenging year due to COVID-19, yet UnionBank emerged resilient with above-industry profitability and a strong balance sheet. With the pandemic fast-tracking the digital tipping point, we will continue to accelerate our digital strategy and initiatives. We remain committed in promoting digital transformation to our customers and partners, in line with our mission to Tech Up Pilipinas!
Edwin R. Bautista
President and CEO, UnionBank
Weak consumer and investor sentiment, high unemployment rate, and a slowdown in business activity are among the adverse economic effects of the COVID-19 crisis. These factors led to dampened demand for credit and the rise of non-performing loans in the banking industry.
As of end-2020, the Philippine banking industry registered lackluster asset growth of 6% year on- year (YoY), while total loans declined by 1%. The industry’s net income also declined by 33%, mainly due to the 4.2 times increase in credit reserves set aside by most banks as loan quality deteriorated similar to the 2008 Global Financial Crisis.
In response to the effects of the pandemic, UnionBank also increased loan loss reserves by 4.5 times to PHP8.4 billion. But despite the unusually high provisions, the Bank recorded a net income of PHP11.6 billion and posted a return on equity of 11.5%, higher than the industry’s 6.6%.
UnionBank’s topline revenues remained strong. Net revenues were at an all-time high at PHP42.1 billion. Net interest income increased by 29% to PHP28.7 billion as margins increased by 76 basis points (bps) to 4.7%. Our higher margins were due to: the record-high current account and savings account (CASA) deposit growth of 24% to PHP258.7 billion; continued expansion of high yielding consumer, SME, and commercial loans; and reduced funding cost amid the low-interest rate environment in 2020. Strong trading gains amounting to PHP8.9 billion also gave topline revenues a boost.
11.6
Net income in 2020; 11.5% Return on Equity
2.2
UnionBank Online App Users and more than 17,000 corporate in The Portal
150000
UBX' platforms i2i, BUX, Sentro, SeekCap
80000
Upskilled Teachers through HEROES 2021 program supporting DepEd's blended learning initiative for 22 million students
The intersection of newer financial tools and technology is creating an enormous impact that can help unleash a sustainable development revolution. Among the country’s pioneers in banking innovation is UnionBank and we are stepping up our efforts for Tech Up Pilipinas.
Tech Up Pilipinas is the natural result of the bank’s digital transformation over the years. From a “brick-and-mortar” model, we are moving into the “tech-firm-with-banking capabilities” model, which is the building block of our own brand of sustainability. It is driven by investments and partnerships that enable and empower people to co-create innovations for a better world.
Pandemic or not, we have always envisioned a bank that will allow more Filipinos, especially the unbanked and marginalized, to adopt digital banking services and enable them to become active partners of our Tech Up Pilipinas mission.
Launching UBX as our tech arm is just the beginning. We are activating units that are geared towards financial inclusion and social empowerment. Our SME business banking unit has intensified the campaign to onboard more Filipino entrepreneurs into the GlobalLinker. This is a digital platform designed for the 350,000 members globally so they are connected and provided with the right knowledge and tools to accelerate the growth of their businesses. One such tool is the recently launched SME Business Banking App, focused on providing online banking services and marketplace solutions with speed, ease, and trustworthiness as our key competitive advantage.
Moreover, to help MSMEs convert to the online platform, UBX offers the payment gateway BUX and digital shop builder Sentro. BUX can be integrated into an online seller’s platform while Sentro helps entrepreneurs set their online shops. Sentro has built-in protections for both the sellers and buyers, as well as logistics services. There are more than 95,000 users of BUX and close to 30,000 sign-ups for Sentro.
Meanwhile, SeekCap, the Philippines’ first same-day approval lending marketplace, supports MSMEs by providing them with sources of credit without having to fill in lengthy loan applications. To date, we have recorded more than 23,000 sign-ups and disbursed loans over PHP100 million.
We have set in place UnionBank’s sustainable finance framework in order to facilitate issuances of green bonds, social bonds, and even tech bonds. In line with the Bangko Sentral ng Pilipinas, we recognize that our main contribution to sustainable development and social good is in ensuring that financial capital is invested in responsible organizations and customers whose businesses aim to improve quality of life and the planet. We believe that by supporting the development of people’s digital and innovation capabilities, we can collectively improve products and services that will have less toll on our planet.
In UnionBank’s case, we envision our sustainable financing program to enable our clients and partners to co-design with us innovative solutions and technology that create better products and services while contributing to sustainability targets. These targets include socioeconomic advancement and empowerment, access to essential services, employment generation, renewable energy, energy efficiency, and pollution prevention technology, among others.
We already have products and platforms in place that promote socio economic advancement and empowerment as evidenced by UBX and its various financially-inclusive initiatives developed in just a year. Meanwhile, our mass market arm and subsidiary CitySavings Bank is also in a sweet spot to carry out sustainable financing activities as its portfolio is aligned to social sustainability.
Our corporate social responsibility (CSR) is serving as an incubator of ideas with a pointed focus towards sustainability. Through this new kind of CSR, we have the ability to create more, reach more, and make a bigger impact by doing what we do best – innovate and accelerate.
For instance, one of our CSR initiatives led to the nationwide campaign to build the digital skills of 800,000 public school teachers through the timely and innovative idea of our employee volunteers to design on-demand, easy-to-use, and engaging learning modules. This has been adopted by the national government and is being implemented by the Department of Education across the country.
With the same spirit of Ubuntu – that sense of being part of a community – and a compassion for others in need, we at UnionBank can leverage our DNA of innovation and digital tools to make a difference. Whether using digital platforms like Sentro and Bux to build online presence, SeekCap to raise funds, or mobile apps like Bonds.ph, technology can be used by a bank to truly create social good. Our goal is to fully align our digital transformation strategy with sustainable value creation. This is an opportunity for us to join the very clear call of advancing business and communities and we will do this by co-creating innovations for a better world.