Rural banks’ resources up 11% in H1

The combined resources of the rural and cooperative banking system grew to P76.7 billion in the first half of 2002, or 11.62 percent better than the P68.71 billion recorded in the same period in 2001.

Likewise, it grew by 7.61-percent higher than the P71.27 billion recorded by end 2001.

The rural banking sector accounted for 93.5 percent while the cooperative banking sector took the balance.

Based on a review made by the Bangko Sentral ng Pilipinas (BSP), the sector benefited from the good performance turned in by both the agricultural and services sector over the past three consecutive year.

Total capital accounts stood at P12.2 billion, an increment of P1.1 billion or 10.5 percent from a year ago.

"For the period January to June 2002, the rural banking industry was able to forge a strong performance, with impressive double-digit growth on key financial performance indicators," the BSP said.

Deposit liabilities continued to grow to P52.2 billion up by 10.8 percent from last semester and by 14.5 percent from end June 2001.

Funding costs was down to 7.8 percent from 8.7 percent at end June 2001 while interest spread widened to 10.8 percent from 10 percent end 2001. The cost-to-income ratio fell to 84.5 percent from 87.5 percent in the same period.

Average return on assets and on equity improved to 1.6 percent and 10 percent, respectively.

"Noteworthy was the rural banking industry’s improvement of overall asset quality particularly with the non-performing loan (NPL) ratio sharply falling from 17.1 percent at end June 2001 to 14.8 percent," the data showed.

The cutback in NPLs outstripped the increase in real or owned properties owned or acquired (ROPOA), thus the ratio of non-performing asset (NPA) favorably decreased from 18.9 percent at end June 2001 to 17.9 percent this semester. Loan loss reserve coverage also improved to 35.7 percent.

Loan portfolio rose from P40.78 billion in end June 2001 to P45.10 billion after six months into 2002. by end 2001, it stood at P42.85 billion.

The top five regions of the rural banking sector accounted for the bulk of the sector’s assets led by Southern Tagalog region or Region IV. Collectively, the top five regions accounted for 67 percent of assets, 63.9 percent of loan portfolio, 71.1 percent of deposit liabilities, and 66.2 percent of capital accounts.

The top five regions in terms of assets, loans, deposits and capital accounts are Southern Tagalog, Central Luzon, Ilocos, National Capital Region, and Central Visayas.

Some of the leading rural banks last year were the Los Banos Rural Bank Inc., UCPB Rural Bank Inc., Network Rural Bank of Southern Philippines (Davao), Davao Cooperative Bank, Pres. Jose P. Laurel Rural Bank (Tanauan) Inc., Ibaan Rural Bank Inc., Golden Seven Bank (Rural Bank Nabua), Guagua Rural Bank Inc., Philippine Rural Banking Corp., Rural Bank of San Juan (MM) Inc., Bank of Florida (Rural Bank of F-Blance) Inc., Imus Rural Bank Inc., Rural Bank of Subangdaku Inc., Consolidated Rural Bank of Cagayan Valley, and the Rang-ay Rural Bank Inc.

Overall, the quantitative count of the rural banking sector stood at 1,914 as of end June this year, broken down as 776 head offices and 1,138 branches or other offices. there are 7,492 banking institutions including universal banks, commercial banks, and thrift banks as of end June 2002.

The entire banking systems had total assets of P3.34 trillion by end June this year of which the commercial banks accounted for a little over P3 trillion.