RCBC microfinance loans breach P100 million in first year

MANILA, Philippines – The microfinance arm of Rizal Commercial Banking Corp. (RCBC) has extended over P100 million in loan in just a year in operation, a top bank official said.

Speaking before the bank’s stockholders, RCBC president Lorenzo V. Tan said their microfinance operations complement the lending operations of the commercial bank.

“We believe that with proper execution and stringent risk management, microfinance will be a strong complement,” he said.

With an average loan disbursement of P39,000, total loans reached 2,600 individual accounts. To date, outstanding loan portfolio amounted to P19.7 million granted to 705 microentrepreneurs.

He said the country relies more and more on small and medium enterprises (SMEs) to keep the domestic economy rolling, opening further access to credit to microentrepreneurs answers the call for greater poverty alleviation.

Aside from RCBC, other commercial banks involved in the microlending through subsidiaries are the Bank of the Philippine Islands (BPI), Banco de Oro Unibank Inc., Metropolitan Bank & Trust Co. and Allied Banking Corp.

RCBC’s microfinance business in Southern Luzon is done through subsidiary President Jose P. Laurel Rural Bank Inc. based in Tanauan City while business in Southern Mindanao is housed within Rizal Micro Bank (Merchants Savings & Loan Association Inc.). The JP Laurel Rural Bank has 10 branches while the Rizal Micro Bank has 21.

RCBC said that it would extend its microfinance business to Davao City as well as Quezon province (Candelaria) before the end of the year.

RCBC estimates that it will hit the P200 million disbursement threshold by July 2011, supported by three new microfinance business offices (MBOs) in Southern Luzon and five in Southern Mindanao.

The microfinance business caters primarily to microentrepreneurs through the disbursement of working capital loan facilities with terms from three to six months. The loan product carries the brand name PITAKA, which is composed of borrowers from various industries in the microenterprise sector such as sari-sari stores (23 percent), market vendors (20 percent), personal services (beauty parlors, repair shops, etc.) (14 percent), eateries/carenderias/bakeries (14 percent), light manufacturing and trading (one percent) and other allied businesses such as mobile phone loading stations, direct-selling, auto supply, flower shop, beauty products, accounting for 28 percent.

The Philippines recently ranked as the secondbest performer in the microfinance sector worldwide behind Peru, based on a study conducted by the Economist Intelligence Unit (EIU).