Yuchengco-led Rizal Commercial Banking Corp. expects to post a net profit of P5.4 billion this year, about the same as the bottom line expected for 2013, in the absence of hefty trading gains.
In a briefing Friday, RCBC executive vice president and head of strategic initiatives John Thomas Deveras said about 80 percent of RCBC’s profit in 2014 would likely come from interest earnings.
Another 15 percent will come from fee-based earnings and the rest from other sources of income, Deveras said.
He also said the bank may grow its loan book by as much as 30 percent this year—much faster than the average 12 percent growth in the past five years—as infrastructure projects under the public-private partnership (PPP) framework could boost its corporate lending portfolio.
The strategic focus this 2014, Deveras said, would be to grow the bank’s loan portfolio and increase the share of the business where margins are higher—particularly lending to consumers and small and medium enterprises (SMEs). RCBC’s loan portfolio is currently at P284 billion, translating to a loan to deposit ratio of 83 percent.
In the first nine months of 2013, RCBC posted a net profit of P4.71 billion, 1.41 percent lower year-on-year due to a sharp decline in trading gains.
For 2013, the expected bottom line is P5.4 billion, lower than the P6.22 billion level posted in 2012.
Moving forward, Deveras said RCBC was in a position to boost its SME portfolio, having invested heavily in infrastructure and a core technology platform.
He said RCBC’s SME lending would be supported by the bank’s considerable branch footprint outside Metro Manila, “robust” credit scoring system and deployment of loan officers to the countryside.
The big risk to RCBC’s targeted growth in lending this year, Deveras said, would be any delay in the rollout of PPP projects.
If so, he said the “more realistic” loan growth target would be 20 percent.
Corporate lending today accounts for the lion’s share of RCBC’s loan portfolio at 65 percent while the consumer and SME businesses, respectively, account for 25 percent and 10 percent.
This year, Deveras said RCBC was targeting to grow the SME and consumer loan books by 40 percent, faster than the 24-percent growth rate projected for the corporate sector.
If this is realized, he said the loan portfolio mix would change at the end of the year, with the corporate segment accounting for 60 percent, consumer at 28 percent and SME by 12 percent.
The long-term goal is to further reduce the reliance on the corporate borrowers.
The ideal mix is 40 percent corporate, 40 percent consumer/credit card and 20 percent SME portfolio, the bank said.
On its distribution network, RCBC ended 2013 with 427 branches.
Deveras said opening more branches wouldn’t be the bank’s priority, expanding by only 15 to 20 branches per year, primarily outside Metro Manila.
To date, 60 percent of RCBC’s branches are outside the metropolis.
Instead of opening branches more aggressively, he said RCBC would roll out more automated teller machines to attain the ideal ratio of four ATMs per branch.
This means that RCBC must boost its ATM network from 1,100 to 1,700 in three years, Deveras said. Doris C. Dumlao