RCBC reshapes balance sheet ahead of tighter rates, credit risk

CEBU, Philippines — Rizal Commercial Banking Corporation (RCBC) is shoring up its balance sheet and repositioning its funding and lending portfolios as the lender braces for a potentially more volatile interest-rate and credit environment in the second half of 2026.

The bank has shortened the average duration of its investment securities portfolio to 3.5 years in the first quarter from 7.3 years in 2021, a move designed to cushion the impact of possible rate increases on its capital position, President and Chief Executive Officer Reginaldo Anthony B. Cariaso said during the bank’s annual stockholders’ meeting.

“My objective remains the same – to protect, scale, and elevate the strong franchise that is RCBC,” Cariaso said.

The lender has also tightened its credit exposure by reducing lending lines to higher-risk segments and rolling out an analytics-driven collections initiative dubbed the CARE Program for auto and housing loan borrowers, allowing the bank to engage customers before signs of financial distress emerge.

On the funding side, RCBC tapped capital markets ahead of the current hawkish cycle, issuing $350 million in offshore sustainability notes carrying a 5.375 percent coupon in January 2025, P12.21 billion in Series F ASEAN Sustainability Bonds in July 2025 and P20.5 billion in Series G bonds priced at 6.08 percent in April this year.

The fund-raising activities broadened the bank’s investor base and lowered its cost of funds before financial conditions tightened, Cariaso said.

RCBC’s consolidated gross non-performing loan ratio stood at 4.8 percent, with its corporate lending portfolio—its largest business segment—posting a gross NPL ratio of 2.7 percent.

Consumer loan delinquencies remained below industry averages, although the bank acknowledged near-term pressures in its small and medium enterprise portfolio, which is undergoing an operational overhaul to address rising bad loans.

“We are navigating a complex and shifting macroeconomic landscape,” Cariaso said. “However, we have been building up our defenses, locking in strategic wins, and fundamentally reshaping our balance sheet to drive sustainable, high-quality growth.”

The bank’s defensive measures come as lenders prepare for slower economic growth, heightened market volatility and potential deterioration in asset quality, prompting financial institutions to strengthen capital buffers and improve funding resilience.