First Macro Bank relies on relationships, not size

MANILA, Philippines - First Macro Bank Inc. (Rural Bank of Pateros) may be a humble rural bank with just nine branches.

But it has a deposit base of over 150,000 grateful individuals and a loan portfolio amounting to P457 million, more than half of which are micro-borrowers.

All its branches are located in Greater Metro Manila and the rural bank knows that it could compete with the “big boys” or commercial banks. So it concentrated on small and medium enterprises, and the lower segment of society.

And it is now reaping the benefits of serving the “smaller” market.

“A few clients are so grateful that they would even open a second bank account with another bank (usually commercial banks) just to keep their relationship with us,” Reggie L. Ocampo, president of First Macro Bank, said.

But majority of their clients are just happy to maintain small deposits accounts (minimum initial deposit of P200, and half that amount for children) and make small or micro-loans with First Macro Bank.

Ocampo narrates that when they opened their Dasmarinas branch in South Burol I in Bagumbayan, people thought that they would not last. A large segment of the population are relocated informal settlers.

Despite the several cases of vandalism and having to close the bank early in the afternoon, First Macro Bank persevered on. And they were rewarded

First, the Manila Electric Co. (Meralco) approached them to receive electric bill payments, maturing later on into a Bayad Center. That means not only servicing transactions related to the electric company, but also making similar transactions from other utilities and telecommunications companies such as Smart, Globe, and PLDT.

Then, the Bank of the Philippine Islands (BPI) put up a kiosk as proof that there was business to be had in that area.

There are days when branches would have long cues of clients paying their bills or making money transfer transactions rather then take a trip to the town proper. “They would rather fall in line rather than spend transportation money.”

Today, the Cavite branch is one of the largest with a deposit base of 30,000 behind its Pateros branch with 50,000. More than half of these are micro in nature.

Most of the long cues have disappeared since First Macro Bank joined the GCash mobile banking environment.

The other branches are located in Binan, Laguna; Angono, Rizal; Bicutan, Taguig; GMA, Cavite; Pasig City; Las Pinas, and its corporate office in Pateros.

“That’s our market. We have established a relationship with the community that a second generation are now our clients,” Ocampo stated.

But they are not sitting on their laurels. They want to give back to their loyal clients.

Ocampo said that his inspiration was One Network Bank (ONB) of Mindanao. The slogan of the biggest rural bank in the country ONB’s slogan is, Pera ng Mindanao, Para sa Mindanao, or simply to make the deposits from Mindanao work for the region in the form of loans, taxes and so on.

The bank president said that they are introducing more loan packages for each branch. In fact, it has already introduced auto loans to reliable and long-time clients.

And the benefits of its correct orientation towards its banking activities have reflected in strong financials.

Net income in first semester of 2010 amounted to P5 million, or more than a 50-percent growth from the P3.3 million in the same period in 2009. Full year 2009 net income was P9.1 million.

Loan portfolio stood at P457 million while total deposits at P509 million end June this year. Total resources were placed at P664 million while capital/net worth a healthy P69 million.

Return on assets (ROA) improved to 0.73 percent end June 2010 from 0.15 percent at the start of the year. Return on equity (ROE) jumped to seven percent in the first semester of 2010 from one percent at the start of the year.

Non-performing assets (NPAs) improved slightly from P95 million at the start of the year to P88 million in June. Likewise, non-performing loans (NPLs) shrunk to P38 million in June from P44 million at the start of the year.

Aside from the nine branches, First Macro Bank operates two off-site branch office (OBO), which would be transformed into full branches by the end of the year. It is eyeing three to four more branches in 2011. Also in the pipeline are onsite automated teller machines (ATMs) for every branch.