RCBC profit up 16% to P1.8 B

MANILA, Philippines - Yuchengco-led Rizal Commercial Banking Corp. posted a net income of P1.77 billion for the first quarter this year, 16 percent higher than the P1.53 billion posted in the same period last year.

The improvement in income could be attributed to an increase in revenues for the period.

“As we face a tougher regulatory interest rate, and global economic environment, we will continue to focus on the quality of our earnings and growth. We invested heavily on talent and technology the past six years. We are now beginning to see visible returns on these investments,” said RCBC president and CEO Lorenzo Tan.

Net interest income grew 12 percent to P3.04 billion, with the increase in core revenues being primarily driven by an improvement in funding mix and growth in loans, especially in the higher-yielding segments.

Demand deposits grew 55 percent to P14.5 billion while CASA-to-total deposits improved to 63.14 percent as of the first quarter this year against 60.52 percent in the same period in 2012.

Loans increased to P197.78 billion with the volume of consumer loans growing 22 percent, SME loans increased by 14 percent and corporate loans by six percent consistent with the bank’s strategy of reducing cyclical assets and increasing actuarial type of loans.

Other operating income increased by 23 percent to P3.58 billion, with miscellaneous income increasing to P811 million. Earnings from treasury trading and investment activities surged by 27 percent to P2.1 billion, while service fees and commissions grew by 20 percent to P576 million.

Increased bancassurance activities from the bank’s strategic partnership with Sunlife-Grepa resulted in Bancassurance sales and bancassurance fees growing by 400 percent and 619 percent, respectively.

Operating expenses reached P3.64 billion mainly in support of its ongoing strategy to expand customer reach and enhance banking convenience.

The bank’s distribution network grew to 422 branches in the first three months of the year from 385 in Q1 2012 and aggressively increased its ATM to 1,055 in 1Q 2013 compared to 841 in 1Q 2012. This resulted in a 2.5 branch to-ATM ratio in 1Q 2013, one of the highest in the industry. Cost to income ratio for the period was at 55.02 percent as against 56.46 percent in 2012.

Asset quality improved further as non-performing loans (NPL) ratio of the parent bank fell 0.37 percent as of first quarter of 2013 from 0.85 percent in the comparative period in 2012.

The bank sold P4.8 billion worth of non-performing assets to Philippine Asset Growth One Inc., an SPC formed by the International Finance Corp., OSJ Group- Malaysia and Altus Transaction Services Inc.

Capital funds reached P48.3 billion while Capital Adequacy Ratio (Basel 2) at 16.85 percent remained above BSP’s minimum requirement of 10 percent. Basel 2 Tier 1 ratio of 14.93 percent also exceeded the six percent regulatory limit.

RCBC’s capital grew by a compounded annual growth rate of 31. 55 percent from 2006 to first quarter 2013, the highest among its peers.

Market capitalization grew 76.39 percent year-on-year to P84.32 billion in first three-month period from P47.8 billion in the same period in 2012. As of end-April, the bank’s capital stood at P94.4 billion.