One Network Bank targets within sight

MANILA, Philippines - The positive gains in the first nine months of 2009 has continued to fuel expectations that the 2009 full year targets of One Network Bank Inc. (ONB), the country’s largest rural bank, is achievable.

“ONB remains upbeat for the rest of the year considering that credit demand is, and will continue, to remain strong for salary, personal, agriculture and business loans,” Alex V. Buenaventura, ONB president, said.

Buenaventura added that the market demand for agri products especially cavendish banana is expected to remain strong in the agri-based economy of Mindanao, and this liquid environment will in turn support the deposit generation campaign of ONB branches especially in the countryside.

 Another indicator of a resilient economy in Mindanao is the sustained growth in total inward foreign remittance volumes.

The Bangko Sentral ng Pilipinas (BSP) forecasts that remittances will grow by a bullish three to four percent from the $16.4 billion recorded in 2008.

“This upbeat outlook makes it possible to hit a yearend 2009 net income of P240 million, matching the actual net income after tax last year,” the bank president added.

Total resources expanded to P9.27 billion end September, or 18 percent better than the P7.8 billion in the same period last year.

Loan portfolio increased by 5.5 percent, or from P5.7 billion in the first nine months of 2008 to P6 billion in the same period this year.

Loan growth was principally accounted for by significant increases in the One Banana Program Loans to cavendish banana small farmer growers, and the One Business Loans to micro and small entrepreneurs in countryside Mindanao.

Deposits ballooned by 20.7 percent to P6.5 billion end September this year from the P5.4 billion in the same period in 2009. Deposit to loan ratio reached 109 percent with more than 70 percent on the bank’s deposit liabilities represents low cost deposits versus the 30 percent representing high-cost time deposits.

Risk-based capital adequacy ratio (CAR) in fact improved 21 percent, or double the minimum required by monetary regulators.

Stockholders’ equity or networth improved by 16 percent to P1.5 billion from the P1.3 billion last year. “Note that steady growth in networth is due to 100-percent stock dividend plow back policy,” Buenaventura added.

Non-performing assets (NPAs) and non-performing loans (NPLs) remained at single-digit levels at four percent and six percent, respectively.

Branch network expanded by five so far bring its total to 75, supported by the 14 percent growth in automated teller machines (ATMs) reaching 88 units.

The so-called widest banking network in Mindanao is complimented by personnel growth hitting a record 987.

ONB is the product of a three-way consolidation between Network Rural Bank (Davao del Sur) Inc., the Rural Bank of Panabo (Davao del Norte) Inc., and the Provident Rural Bank of Cotabato (North Cotabato) Inc.

Incidentally, ONB has a pending application with the BSP for the consolidation of the Rural Bank of New Corella (Davao del Norte) Inc.

And for the rural banking system, it is turning into a precedent setting or test case under the new merger, acquisition, and consolidation regulations under BSP Memorandum 2009-028.

The new regulation involves the Philippine Deposit Insurance Corp. (PDIC) but retains a number of incentives for mergers and consolidations from previous circulars.

The two regulators have also opened a P5-billion facility for acquiring banks to use for purposes of mergers, acquisitions, or consolidation.

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