UnionBank sees growth in retail banking

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UNIONBANK of the Philippines (UnionBank) said that retail banking will continue to grow as more Filipinos enter the work force.

In an interview with BusinessWorld, UnionBank President and Chief Executive Officer Edwin R. Bautista said the country’s growing population will continue to boost retail banking.

“The bigger influence in our growth moving forward is population growth — the [demographic] sweet spot,” Mr. Bautista said last week.

A demographic sweet spot is a period where a chunk of a country’s population is already in the work force.

This means that more young people will be working. This earning capacity makes the local market more attractive.

“We have one of the most perfect combinations of demographics, growth rate and low base. Our productive work force is growing at a rate of 3-4%. Which means that, 18 years ago, our [population growth] was in that range… Now it’s paying off,” Mr. Bautista added.

“There’s still a lot of room to grow. What’s important is that the economy will not overheat along the way.”

Mr. Bautista added that due to rising household incomes as a result of the growing work force, financial products such as loans and insurance are in demand.

“That’s why insurance is hot, credit cards, cars and personal loans will be hot. Consumer [banking] will [continue to] be hot — that’s why that’s going to be a battlefield.”

With the foreseen growth in retail banking, Mr. Bautista said doing business digitally is necessary in order to remain relevant.

“The question is, will you still be approaching it the old-fashioned way of selling it in your branch, or you’ll find the customers in the digital space? That’s the behavior now,” he added, noting that customers are now reluctant to go to bank branches since transactions such as availing car loans and providing signatures can be done digitally.

In a previous forum, Mr. Bautista said a bank should operate as an “IT (information technology) company with a banking franchise” to keep up with the times.

UnionBank logged a lower net income in 2017 despite positive recurring income across all its business segments. It earned P8.4 billion last year, down by 16.9% from the P10.1 billion in 2016.

Shares of UnionBank closed at P90.50 on Friday, down 50 centavos or 0.55% from the previous close. — Karl Angelo N. Vidal