Higher rates weighed down Landbank in first quarter

Profits of state-run Land Bank of the Philippines fell by nearly half in the first quarter of the year due to higher interest rates.

In a statement, Landbank said it posted a net income of P2.9 billion in the January-to-March period—down by 44 percent year-on-year. This translated to a return on equity of 11.9 percent.

Landbank president and CEO Gilda E. Pico attributed the decline to reduced profits from investments on the back of an increase in interest rates from historically low levels in the first half of 2013.

“Notwithstanding these low Q1 results, we are encouraged as income from loans remains strong,” Pico said. “We are well-positioned for sustained growth this year as we continue to expand our deposits and increase revenue from traditional and non-traditional sources.”

The dip in profits came despite a 28-percent growth in deposits to P733.8 billion at the end of March.

Loans grew 13.4 percent to P310.9 billion—slower than the rest of the industry. Data from the central bank showed outstanding loans of universal and commercial banks rose by 20 percent at the end of March.

Landbank’s total assets increased by 18 percent to P873.7 billion from P737.4 billion in March 2013, while capital stood at P67.6 billion.

Alongside fortifying its universal banking operations, Landbank remains the biggest lender to the agricultural sector, Pico said. The lender prioritizes small farmers and fisherfolk, microenterprises and SMEs, agri-aqua related projects of local governments and government-run firms, socialized to medium cost housing, and utilities.

Landbank maintains a presence in 80 provinces, with a nationwide network of 344 branches and 1,256 ATMs. It also plays a significant role in major government programs such as the Conditional Cash Transfer, the Food Supply Chain Program, and the overseas Filipino Workers’ Reintegration Program.