UnionDigital poised to be a pickier lender
INQUIRER.net stock images
MANILA, Philippines — UnionDigital Bank will be pickier in granting loans to maintain the improvement in its asset quality while also growing its client base.
Danilo Mojica II, UnionDigital president and CEO, told reporters on Wednesday they would make loans more accessible for Filipinos while also being more “disciplined” in lending.
”The way to prosperity is for people to not be afraid of borrowing so that they can use it for their needs, especially for their businesses and ancillary needs as individuals,” Mojica said during a press briefing.
According to him, UnionDigital, the digital banking arm of Union Bank of the Philippines, will use alternative data to get to know their clients applying for loans. These include records of timely payment of utility bills in the absence of credit scores, which are tied to credit cards.
READ: UnionBank pumps P1.6 billion more into digital banking unit
Soured loans
Last year, UnionDigital saw its gross nonperforming loans (NPL) ratio, a gauge of borrowers’ capacity to repay loans, settle at 22.86 percent from 28.35 percent previously.
This is significantly higher than the industry average of 3.27 percent in 2024.
A higher NPL ratio can translate to lower profitability, as nonpayments increase provisioning costs.
Although he did not disclose exact figures, Mojica said, “I can safely say that we’re well within single-digit numbers for NPL,” Mojica said.
READ: New digital banks set to fire up competition for deposits
1 million users
Launched in 2022 specifically to drive Unionbank’s digital loan expansion, UnionDigital currently has more than 1 million users, around 453,000 of whom are availing loans. Clients usually borrow P30,000 to P50,000 each, with tenors ranging from three to nine months, Mojica said.
Despite the stricter approach, the CEO noted that loan growth would not be significantly impacted, especially with new products in the pipeline.
By September, UnionDigital will expand its offerings with cash loans, a digital loan product that will be launched via its mobile application. This was specifically designed for first-time borrowers, as it would “remove common barriers, such as collateral and extensive documentation,” the bank said.
Next month, it will likewise roll out a virtual Visa debit card to encourage more digital transactions.
