PSBank may revise its targets due to VAT, SARS

The Philippine Savings Bank (PSBank) may revise its projections this year due to the implementation of the 10-percent value-added tax (VAT) and the negative effect of the severe acute respiratory syndrome (SARS).

From 20 percent set early this year, bank officials said they might have to turn down the target to a more modest 10 to 12 percent.

The original target was based on the positive annual growth last year. PSBank registered a whopping 72.8 percent growth in its net income, or from P174.7 million in 2001 to P302 million last year. In 2000, it was recorded at P120 million.

Likewise, loan demand in the first three months of 2003 grew by 180 percent, which at that time justified the thrift bank’s bullish attitude.

"We will also be making huge investments this year such as opening more branches and establishing more automatic teller machines (ATMs)," PSBank president Pascual M. Garcia III said in a press briefing yesterday.

Garcia said the implementation of the VAT on banks and other financial institutions will have a negative effect on the sector’s growth and it may suppress borrowing initiatives of the consumer market.

The VAT slaps higher tax rates than the former five-percent gross receipts tax (GRT), PSBank estimates that their lending rates may grow by at least one percent based on their initial computation. "That will impact mainly on new loans," bank officials said.

Existing loans must start paying the VAT effective January this year.

The dreaded virus, while not affecting the banking industry directly, impacts more on the overall health of the economy and the real impact would only be felt in the second or third quarter of the year.

As a countermeasure, PSBank is set to expand its branch network, introduce new consumer loan products, establish more ATMs, and expand its informational technology capabilities. "automation is the key," Garcia said.

The bank is investing at least P80 million for 18 new branches to compliment its existing network of 103 branches nationwide. Another 50 ATMs will be added to its present number of 36.

PSBank is the thrift and savings bank arm of the Metropolitan Trust and Banking Corp. (Metrobank), the country’s biggest commercial bank in terms of assets.

It is considered the second largest thrift bank in the country. Last year, its total resource grew to P28.1 billion or 33 percent better than the P21.2 billion it declared in 2001. Total deposits surged to 35 percent to P5.8 billion.

Its non-performing assets (NPAs) stood at a mere P3 billion while its non-performing loans (NPLs) stood at a manageable P1.2 billion or roughly 6.9 percent of its total loan portfolio.

Its capital adequacy ratio (CAR) is 16 percent or several times better than the 10 percent required by the Bangko Sentral ng Pilipinas (BSP).