Rang-Ay Bank income up 38% in 2010

MANILA, Philippines - The Rang-Ay Bank, the leading rural bank in Northern Luzon, has reported a 38-percent increase in net earnings in 2010. Or from P26.95 million in 2009, the La Union-based bank realized an income of P37.18 million end December 2010.

In a report, Rang-Ay Bank president and chief executive officer Ives Q. Nisce said the bank improved its mix of funding, increasing its low cost deposits such as checking accounts, savings accounts or CASA.

“The growth was likewise fueled by the decline in the cost of funds of the bank,” Nisce added.

The bank president likewise noted the strong performance of its new branches located in Narvacan, Ilocos Sur and Rosales, Pangasinan.

This year, Rang-Ay Bank plans to expand it branch network with five more branches, to be located in Dingras, Ilocos Norte; Sinait, Ilocos Sur; Rosario, La Union; San Carlos, Pangasinan and a second branch in Baguio City.

Meanwhile, deposits grew by 14.8 percent, or from P946 million in 2009, to a little over P1 billion end 2010.

Loan portfolio marked modest growth as the rural bank stayed focused despite the strong economic momentum.

It grew by P21.4 million to P815.8 million, as Rang-Ay Bank reduced its non-performing loan (NPL) and non-performing asset (NPA) ratios, to -0.7 percent and -34.6 percent, respectively. “NPA dropped considerably with favorable sales of the bank’s acquired assets,” the bank president added.

Its NPAs stood at P107 million while bad debts at a manageable P67 million.

Non-interest income fueled the bulk of the growth for income, including the sale of assets acquired coupled with the increase in fee-based income, particularly remittances.

“Remittances are fast becoming one of the bigger earners for the bank with its tie-ups with Western Union, Uniteller, Globe G-Remit and BDO remit,” Nisce pointed out.

Total resources grew by 12.5 percent, reaching P1.446 billion in 2010 from P1.28 billion in 2009. Its provisioning for probable losses stood at P24.6 million.

Total capital expanded to P275 million for an increase of 18.5 percent from the previous year position of P232 million.

Thus, Rang-Ay Bank’s capital adequacy ratio (CAR) stood at 22.56 percent, or double the minimum required ratio by the Bangko Sentral ng Pilipinas (BSP) of 10 percent.

Tier 1 capital stood at 19.15 percent while its return on equity fell to 21.3 percent.