Yuchengco-led Rizal Commercial Banking Corp. (RCBC) reported a slight dip in profit in the third quarter due to lower trading gains, but other parts of its business showed continued strength despite low interest rates that means thinner margins for lenders.
In a statement on Monday, the bank said it would focus its efforts over the next few months on grabbing a larger share of the highly profitable consumer lending market to offset declines in other business segments.
“Developing and providing a wide range of financial products that provide features and functionalities that are most relevant to clients in every segment is one of the bank’s strategies in capturing a bigger share of the retail market,” RCBC said.
RCBC’s profit at the end of the January to September period settled to P4.71 billion, down 1.41 percent year-on-year.
The bank attributed the decline to the sharp drop in its trading gains, particularly from fixed-income securities. Income from this segment fell 44.8 percent to P2.88 billion.
Gross revenues excluding trading gains increased 26.11 percent, RCBC said.
The company said the dip in trading gains was partly offset by a 15-percent increase in net interest income to P9.59 billion. RCBC reported increases of 20 and 24 percent for its consumer and small business loans, respectively, during the nine-month period.
Low-cost, loanable funds in the form of current and savings accounts (Casa) deposits also increased 23 percent to P165 billion, helping offset lower interest rates.
Amid intense pricing competition, the bank said its net interest margin improved considerably from 3.87 percent to 4.17 percent.
Fee-based revenues, driven by automated teller machine (ATM) services, retail banking, trust products, money transfers, and credit card fees, among others, increased 62.8 percent to P5.31 billion.
Meanwhile, growth in total operating expenses was subdued at 4.64 percent to P10.44 billion. The bank opened eight new branches and 122 ATMs from January to September this year. This brought the company’s total consolidated network to 428 branches and 1,132 ATMs.
“RCBC demonstrated consistent and solid progress in the core business as a result of its business model transformation in preparation for the new regulatory environment,” RCBC CEO Lorenzo Tan said in a statement, referring to stricter capitalization rules that the BSP plans to implement in January.
Meanwhile, the company said it also benefited from its insurance system. Its affiliate, Sunlife-Grepa, raked in P6.8 billion in bancassurance sales, up 198 percent year-on-year.
Rizal Microbank, RCBC’s microfinance arm, increased loan disbursements by 49 percent, driving up its total loan portfolio, which grew by 105 percent, the bank said. To sustain this trend, RCBC said Rizal Microbank would add 12 new branches around the country to bring its total network to 26.