RCBC net income up to P780 million in first quarter

MANILA, Philippines – Yuchengco-controlled Rizal Commercial and Banking Corp. (RCBC) posted a net income of P780 million in the first three months of 2009, a slight one percent gain from the previous year as it built up its lending portfolio despite poor global economic conditions.

“The bank continues to focus on the basics: Building its core business of diversified loan portfolio and deposits. RCBC aims to pursue the strategy of further building financial strength, expanding market reach, and improving customer service quality during this economic slowdown so that it will emerge even stronger when the economy gains in strength,” said Lorenzo V. Tan, RCBC president and chief executive officer.

He said core net income, which strips out forex and derivatives deals, increased 130 percent as the prior year’s earnings included non-recurring profits of P434 million on a sale of a foreclosed building in Makati.

“Contributing substantially to the growth in net income was a higher net interest income from the parent bank by P259 million or 18 percent higher than 2008,” Tan said in a report.

Interest income from loans registered a growth of 32 percent resulting from increased volumes and better yields. Consolidated net interest margin stood at 4.3 percent.

Trading gains went up a whopping 170 percent with the improvement in the financial markets. Income from commission and fees were also higher by 10 percent.

Provisioning for loan losses likewise expanded 52 percent or P61 million higher than the previous year, further strengthening the bank’s reserve position.

“RCBC’s balance sheet showed the bank continuing to build its financial strength while making solid gains in its various lines of businesses,” Tan said.

Total consolidated resources reached P267.2 billion, up 15 percent from P232.6 billion posted in the same period last year.

Total loans stood at P139.6 billion or a growth of 23 percent as loans to all market segments increased. Loans by the corporate sector grew 45 percent, 30 percent for small and medium enterprises, and 10 percent for the consumer or retail market.

“The expansion of its branch and ATM networks, and the activation of new and improved electronic banking channels such as RCBC Access One and the introduction of new retail banking products such as RCBC MyWallet all contributed to the increase in total deposits by 23 percent to P200.6 billion, with the low-cost CASA deposits rising by 12 percent to P90.4 billion,” Tan noted.

As of end-March 2009, RCBC’s consolidated branch network reached 330 while its ATM network has grown to 424.

Meanwhile, its non-performing loan (NPL) ratio improved to 2.83 percent from 6.08 percent in the previous year, reflecting the bank’s continuing efforts to improve asset quality.

Its capital adequacy ratio (CAR) stood at a healthy 17.02 percent, with much leeway for asset growth from the minimum regulatory requirement of 10 percent. This will be further strengthened with the issuance of additional P4-billion Lower Tier 2 capital this month.

RCBC is currently the country’s fourth largest private local universal bank in terms of loans and capital.

In 2008, it reported a 32.9-percent decline in consolidated net income, or from P3.21 billion in 2007 to P2.15 billion last year.

Last year, RCBC acquired Merchants Savings and Loan Association Inc. to expand its scope to the thrift and consumer markets. Last February, it acquired J.P. Laurel Rural Bank as part of its growth strategy and platform for its micro-finance business.

It is a strong player in the remittance business with a wide presence overseas through remittance subsidiaries and tie-ups in North America, Europe and Hongkong. RCBC is a member of the multi-industry conglomerate Yuchengco Group of Companies.