Landbank clarification

This pertains to the Postscript column of Mr. Federico Pascual, Jr., which came out in the July 5 issue of The Philippine STAR entitled “Oversolicitous dads ruining sons’ careers.”

We would like to make the following clarifications:

First, Landbank sets financial targets (for the coming year) every last quarter of the year as part of our annual planning wherein we consider factors such as macroeconomic indicators, trends and forecasts from the banking and other related industries, as well as the bank’s historical financial performance. These annual target are presented for approval by the LBP Board of Directors.

It has never been Landbank’s practice to adjust its annual targets for revenues, expenditures and net income midway or at any time during the year.

On the average, we have targeted an increment of at least 10 percent above the previous year’s net income level. Variances of actual figures on revenues and expenses versus set targets may occur during the year due to various factors such as movements in interest and exchange rates as well as sale of big assets.

Our greater and more important concern as a bank is the net income target as it is one of the most important measures of our performance.

From 2001 to 2005, Landbank consistently attained and even exceeded its net income target. This was a result of prudent and judicious use of resources, effective cost management and aggressive marketing efforts coupled with enhanced customer service.

Second, with regard to the notable increase in total expenses for 2004, this was triggered by the substantial growth in deposit liabilities which, in turn, led to the rise in interest expense on deposits. The shift on the tax imposed on banks from value added to gross tax was also a contributing factor.

And lastly, Landbank – under the leadership of then president and CEO Gary Teves exhausted all efforts to retain the servicing of the GSIS. However, we had to respect its decision to transfer to another bank especially since the Monetary Board had already given its approval to the other bank to accept the GSIS deposits.

To mitigate the impact of the loss of the GSIS account, Landbank reinforced its marketing campaign and deposit solicitation. These efforts proved to be successful as significant amount of deposits were generated. In fact, LBP’s total deposits continued to grow over the years, to its present record level of P283 billion.

We hope we have clarified the matter. — AGUSTIN FREDERICK A. APILADO, Assistant Vice President, Corporate Affairs Department, Landbank