Solidbank eyes lead in housing loans

Amidst merger talks with Metropolitan Bank and Trust Co. (Metrobank), Solid Banking Corp. (Solidbank) remains optimistic it could capture a big chunk of the banking industry's home loan business, ranking bank official said yesterday.

In an interview, executive vice president for retail and branch banking group Joey Bermudez said they expect their home loan portfolio to grow by 90 percent this year from P700-million total new bookings recorded in 1999. The P700-million new home loans registered in 1999 went up by more than 100 percent from 1998's level.

In five years time, he said they project their home loans to increase to P10 billion from the present P2 billion.

According to Bermudez, despite the "uncertainties" due to still unresolved merger talks with Metrobank and Solidbank's stockholder Bank of Nova Scotia, they continue to operate "business as usual."

He said their newly-launched home loan product "Rate Protect" is expected to be of great help for the bank to achieve its ambitious loan growth projection. As of press time, Solidbank was able to approve a total of P300-million worth of loans under this new home loan product line.

He said the Rate Protect program at present, accounts for about 75 percent of the P700-million new bookings they have posted in 1999, while the remaining 25 percent went to fixed-rate home loans.

To make the Rate Protect more attractive, he said they have reduced further their welcome rate for the first quarter of 2000 to 11.5 percent from 12 percent.

The loan under Rate Protect is repriced quarterly at 91-day Treasury bill (T-bill) rate plus five percent. Regardless of what happens to the T-bill rate in the next five years, the interest rate of the Rate Protect loan will never go beyond 16.75 percent. The product is available to all 113 branches of Solidbank.

Bermudez admitted that Solidbank's total consumer loan portfolio is basically small, amounting to less than P5 billion.

He said based on their five-year program, they expect the home loan to eat up to two-thirds of the entire consumer loan portfolio of the bank. At present, the home loans represent about 50 percent of the total consumer loans of Solidbank.

Their optimistic projection, Bermudez said, was anchored on the assumptions that the low interest rate regime will continue and the government will continue to provide low-cost housing to address the huge housing backlog in the next few years.

Aside from housing loans, he also expects their credit card business to grow this year. Last year, the bank's credit cardholders' base surged by 50 percent.

He said the delinquency rate of their home loans is very minimal or less than five percent even during the height of Asian financial crisis in 1997.