The Bangko Sentral ng Pilipinas (BSP) has approved the request of Union Bank of the Philippines (UnionBank) for additional equity investment of up to P900 million in wholly owned subsidiary UnionDigital Bank Inc.
In a disclosure to the Philippine Stock Exchange (PSE), UnionBank said the BSP approved the capital infusion on Sept. 21, 2023 per its letter dated Sept. 26.
The plan to add more capital into its digital banking unit was approved by UnionBank’s Board of Directors in their meeting on June 23, 2023 “to support business growth and to strengthen its capital position.”
It added that, the additional capital will allow UnionDigital to sustain its growth trajectory. UnionDigital is engaged in the general business of Digital Banking, including other expanded services as may be approved by the Monetary Board of the BSP.
The cash infusion will be through the subscription by UnionBank to 90 million new shares at P10 per share to be issued by UnionDigital equivalent to 23.07 percent of its outstanding capital stock.
The fresh capital is seen to help drive the UnionDigital’s expansion, particularly in digital loans which will soon be launched in the UD app.
After its capital has been beefed up, the UD app will be able to expand its digital loan offerings via its app and APIs, providing customers with faster access to credit and a seamless loan application process.
“This approved funding indicates UnionBank’s confidence in our strategic growth plan and strong financial performance,” said UnionDigital Bank President and CEO Henry Aguda.
He added that, “we will use this to fuel our growth trajectory and allow us to better serve the financial needs of our customers.”
“Nearly 70 percent of our customer base comprise of individuals with limited means at the base of the income pyramid – these are the people we want to help and include in the financial system,” Aguda noted.
UnionDigital reported that it was profitable during the first quarter of 2023, driven by its ecosystem-led business model.