UNION BANK of the Philippines, Inc. (UnionBank) will infuse P1.8 billion in fresh capital into its online lending arm UnionDigital Bank, Inc.
The infusion was approved by UnionBank’s board of directors at a meeting on Friday, the listed lender said in a disclosure to the local bourse on Tuesday.
The fresh funds will be used “to support UnionDigital’s ongoing business operations and allow it to deliver sustainable growth,” UnionBank said.
UnionBank last month said it made an equity investment of P900 million into UnionDigital to support its subsidiary’s growth and boost its capital position.
UnionDigital is planning to introduce high-frequency lending in the second quarter or second half of 2024, targeted towards individuals that live “day-to-day.”
The first version of the loan will have a tenor of 30 days with no repayment penalty. UnionDigital is looking to introduce shorter tenors in descending order, starting with two weeks, then weekly, and then daily.
The loans will be priced slightly above credit card rates, it said.
As of November, the digital bank’s outstanding loan balance stood at P12 billion.
UnionDigital is one of the six Bangko Sentral ng Pilipinas-licensed digital banks in the country. It secured its online banking license in July 2021 and began operations in July 2022.
UnionDigital’s parent UnionBank saw its net income drop by 58.99% year on year to P1.65 billion in the third quarter as it set aside more loan loss provisions in the period versus the prior year.
As of Dec. 31, 2022, UnionBank had 385 branches, and 585 automated teller machines nationwide.
UnionBank’s shares dropped by 20 centavos or 0.34% to end at P58.80 apiece on Tuesday. — A.M.C. Sy