Landbank eyes growth this year

MANILA, Philippines — State-run Land Bank of the Philippines is aiming to return to profit growth this year despite the income impact of waiving digital transfer fees and a challenging economic environment, as the lender looks to expand its loan portfolio and sharpen balance sheet management.

Landbank president and CEO Lynette Ortiz said the bank is hoping to post low single-digit earnings growth by year-end, after its net income declined by four percent in the first half.

“We’re hoping to eke out some growth by the end of the year. We’re making every effort to do that,” Ortiz told reporters yesterday, adding that the bank is eyeing low single-digit growth in income.

Landbank booked a net income of P24.21 billion from January to June, four percent lower than the P25.2 billion in the same period last year.

Its balance sheet, however, continued to expand with total assets increasing by 2.8 percent to P3.54 trillion as of end-June, with net loans and receivables reaching P1.28 trillion.

Ortiz said Landbank is taking a measured approach to sustaining earnings, particularly as the bank absorbs foregone fee income from its push toward cheaper digital transactions.

“There is an impact. But we are trying to balance what we have lost in terms of income with our developmental mandate and our financial inclusion mandate,” she said.

“So it’s imperative for Landbank to really be able to extend these services. But I guess for us, it’s really a matter of how we’re going to recoup all of what we’ve lost,” Ortiz added.

Last month, Landbank removed fees on online InstaPay and PESONet fund transfers as part of efforts to make digital transactions more accessible.

Since the waiver took effect only in July, Ortiz said its impact was not yet reflected in Landbank’s first-half results.

She declined to estimate how much the move could weigh on third-quarter or full-year earnings, saying it remains too early to quantify the effect.

Instead, Landbank plans to offset some of the lost fee income through more efficient use of its balance sheet and continued expansion of lending, particularly to sectors covered by its developmental mandate.

Still, the lender is approaching the second half with caution as economic conditions remain difficult.

The Philippine economy expanded by only 2.3 percent in the second quarter, slower than the 2.8-percent growth in the first quarter. This brought first-half growth to 2.6 percent, underscoring weak momentum amid softer consumption and investment.

“Cautiously, I think there are still a lot of headwinds,” Ortiz said. “I think it’s really all about efficient balance sheet management, also managing our risk very cautiously, very well, while continuing on our developmental mandate.”

Ortiz said the bank is likewise being measured in credit provisioning as it seeks to protect asset quality while growing its lending business.