PBCom eyes expansion of SME, consumer lending

MANILA, Philippines–Philippine Bank of Communications (PBCom) is repositioning itself as a commercial bank for small and medium enterprises (SMEs), aiming to unlock synergies from the flagship retailing business of its new principal investor, the group of Puregold Price Club chair Lucio Co.

In the next three years, PBCom aspires to double its loan book, with SME lending targeted to account for more than 50 percent of the total portfolio, bank chair Eric Recto said in a briefing yesterday.

PBCom presently has a P73.6-billion balance sheet.  Its loan book amounts to P28 billion or less than half of its P58 billion deposit base.  Of its total loan book, 15 percent is deployed to SMEs and 8 percent to consumer lending while the bulk is still focused on corporate lending.

“Clearly, we would like to be a much bigger bank. We’re looking at what’s available to us,” Recto said, adding that doubling the loan book would be feasible in the next three years.

“We would like to have more than 50 percent of loan portfolio (devoted) to SMEs,” he said, adding that the consumer business would also likely be a “meaningful” contributor moving forward.

When he took over control of PBCom in 2012 following the exit of former Trade Minister Roberto V. Ongpin, Recto said finding a niche for the bank was a big challenge.  In an environment of cutthroat competition and tightening banking regulations, Recto said his initial focus was to bring in a foreign strategic partner into PBCom and all efforts were geared toward making the bank attractive to a foreign investor.  However, he said nothing “compelling” came along the way.

The installation of a new team led by former Citibanker Nina Aguas in August 2012 helped the bank craft a well-defined identity: to rebuild itself to be a niche player in the SME and consumer segments, Recto said.

Eight months ago, Recto said an opportunity came for the bank to build a “symbiotic” partnership with the group of retailer Lucio Co, which he said was still in line with the bank’s vision of building up its SME and consumer business segments.

With the Cos now behind the bank, Recto said PBCom was in a good position to link up with about 3,000 SME suppliers of Puregold—including those who supply fresh farm produce—and “help empower some of them to be a more successful enterprise.”

PBCom also sees opportunity in handling the cash management transactions of Puregold concessionaires, tenants and other entities in the supply chain—similar to the synergies tapped by Banco de Oro Unibank with affiliates SM Prime Holdings and SM Investments Corp.

Further going “downstream,” Recto said Puregold’s more than 300,000 customers could widen PBCom’s base for microfinancing.