Yuchengco-led bank to boost SME lending

CEBU, Philippines- A senior official of the Yuchengco-led Rizal Commercial Banking Corp. (RCBC) said the small and medium enterprise (SME) market remains significant to the bank's lending growth and will continue to be its focus area.

"Our focus is to grow the SME lending," RCBC President and Chief Executive Officer Lorenzo V. Tan said in an interview with The FREEMAN on Friday.

Tan said he believes the bank has a lot of room to grow its SME lending because of prospects that business expansion will continue.

Tan recognized the need of SMEs for financing to make them grow and become more competitive amid the integration of Association of South East Asian Nations (Asean).

The CEO noted he believes in the potential of SMEs which could eventually become large corporations.

As of end-June this year, RCBC's SME loan portfolio stood at P25 billion, bulk of which went to wholesale and retail trade, construction and real estate, among others. The lender targets to grow SME loans, which now comprise 12% of its total loan portfolio, by 30% this year.

The Yuchengco-led bank had reported that its core lending business expanded by 18% to P275.7 billion as of June, with corporate, consumer and SME market segments sustaining their growth.

"We know we are in the business of managing risk while providing opportunities. That's why we provide capital to the SMEs," Tan said.

In a separate interview with Rommel S. Latinazo, president and CEO of RCBC Savings Bank, the thrift banking arm of RCBC, he said it's an opportunity for the bank to finance the business expansion of SMEs as the economy grows.

"Business climate has been favorable. We see a number of business expansions and therefore when you expand, there's a need for financing," Latinazo noted.

Latinazo also said the thrift bank's loan portfolio has been growing, eyeing to grow more than 20% with auto and home mortgage as drivers. The thrift bank's loan portfolio stood at P54.7 billion as of March this year, buoyed by its core consumer loan business. 

The official noted 55% of RCBC Savings' total loans is for home mortgage loans, 35% is for auto financing and 4% is intended for SME loans.

Latinazo explained that a reliable credit information system is needed to ease SME bank financing.

"For you to lend, you need to know your customers and understand their business and their financial condition. There's a need to improve on that and slowly we're improving," the bank executive said. 

He said dealing with banks is more "efficient and economical" for SMEs, considering that lending rates of banks are more affordable than those of informal lenders.   

As of end-May, RCBC Savings' distribution network stood at 150 branches and extension offices and 405 automated teller machines (ATMs).

In the first semester this year, the thrift bank posted a P373-million profit, lower compared to P466.7 million it booked in the same period last year.

Moreover, its parent bank RCBC's network increased to 450 branches while its ATMs rose to 1,208 as of the first semester. The listed lender is currently the country's sixth largest commercial bank in asset terms.

RCBC's unaudited consolidated net income in the first half this year totaled P2.53 billion, up 25% from P2.02 billion it earned in the same period in 2014, fueled by its loan business.

During the period, deposits with the bank reached P321.9 billion while total number of accounts also expanded to 6.9 million from 6.3 million as of first half last year.  

Shares in RCBC closed at P30.90 per share last Thursday, down 0.64% from Wednesday's closing price of P31.10 per share.   (FREEMAN)