PHOTO: Official website of BDO / bdo.com.ph
BDO Network Bank (BDONB), the country’s largest rural bank, is set to debut in Batanes province next year to reach communities in the Philippines’ northernmost island, whose capital only has one bank.
In an interview with the Inquirer on Tuesday, BDONB president Jesus Antonio Itchon said the Basco branch would open by the first half of 2025.
According to Itchon, the municipality currently has only the Land Bank of the Philippines to support the banking needs of the community.
“By the first half of next year, we’ll be present from Basco to Tawi-Tawi,” he said.
Before BDO Unibank’s P6.7-billion takeover in 2015, BDONB was led by the Consunji family under One Network Bank Inc. (ONB).
Back then, ONB only had 98 branches exclusively in Mindanao.
In order to rapidly grow its network and capture more clients, BDO changed ONB’s business model to focus on offering unsecured loans, Itchon said.
Unsecured loans do not require the borrowers to have any collateral—such as a car or house—before they are approved. In the event that a borrower defaults on the loan, the lender can seize the collaterals to recoup losses.
This makes unsecured loans riskier than secured loans, as lenders operate on a system of trust and rely solely on the borrower’s creditworthiness and promise to repay.
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BDONB currently offers loans to retail customers, as well as micro-, small- and medium-sized enterprises, most of which are sari-sari store owners in rural towns.
Customers may loan from P30,000 to P1 million at an interest rate of 3.5 percent per month. This is smaller than the current benchmark rate of big banks at 6.25 percent.
These loans are payable up to three years.
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“We want to focus on the underserved [communities] … and because this is the intention, we need to be accessible,” Itchon said.
While they also lend to startups, Itchon clarified that only companies existing for at least two years may be qualified for a loan to ensure that loans could be paid back.
So far, BDONB has 431 branches scattered in the country’s three island groups, with 189 in Luzon, 98 in the Visayas, and 144 in Mindanao.