Yuchengco-led Rizal Commercial Banking Corp. (RCBC) has completed its divestment from its affiliates in the property sector in line with efforts to reduce its exposure to the real estate industry and focus on its core business.
In a disclosure Wednesday, RCBC said it had consummated the sale of its 17.66-percent stake in RCBC Realty Corp. (RRC) to House of Investments Inc. and Pan Malayan Management and Investment Corp.
The company said it had also completed the sale of its 49-percent stake in RCBC Land Inc. (RLI) also to Pan Malayan.
The bank’s shares in RRC and RLI were sold at P2.3 billion and P1.28 billion, respectively. The transactions were in accordance with separate share purchase agreements signed by the bank with the buyers on Aug. 15 for RLI and Aug. 16 for RRC.
The sale of its investments in non-core businesses would help RCBC comply with stricter capitalization rules under Basel III regulations that local banks are required to adhere to by next year.
The bank not only generates proceeds from the sale but also reduces the risk weights from its property holdings, especially as capital adequacy ratio requirements tighten.
The sale also trims RCBC’s exposure to the property sector because investments in property firms are now counted by regulators as part of a lender’s vulnerability to the historically volatile real estate industry.
In August, international debt watcher Fitch Ratings upgraded RCBC’s subordinated debt rating in recognition of the company’s efforts to improve its capital base, which includes the sale of non-core assets.
RCBC grew its first-half net profit by 5.18 percent year on year to P3.17 billion on higher interest earnings. This translated to an annualized return on equity of 14.35 percent and return on assets of 1.73 percent.
Net interest income reached P6.18 billion, higher by 12.5 percent than the level last year. Despite intense pricing competition, the low interest rate environment and prudent credit stance during the first semester of 2013, RCBC’s net interest margins improved to 4.11 percent from 3.8 percent in the same period last year.—Paolo G. Montecillo