RCBC’s Net Income Up by 17%, Boosts Provisions to P5 Billion
Rizal Commercial Banking Corporation posted an unaudited consolidated net income of P3.1 billion even as the provisions were boosted by 94% to P5.2 billion to account for the higher risks related to the post-lockdown environment. The Bank is taking on substantial provisions for the first half of the year, as much as 3.5x more than the provisions set aside last year, normalized for extra-ordinary items.
The growth in net income was primarily driven by the 25% increase in gross revenues to P20.9 billion as net interest income and non-interest income grew by 20% and 32%, respectively. Core business continued its growth momentum complemented by the 49-basis point improvement in net interest margin to 4.3%. In addition, favourable market opportunities resulted in P5.7 billion trading gains for the first half of 2020. This allowed the Bank to take a conservative approach and book higher provisions to proactively manage the headwinds that the entire industry is anticipating.
RCBC recognizes its crucial role as it joins efforts with the whole country in jumpstarting the economy during this time of pandemic. The Bank has greatly focused on the changing needs of its customers by continuously investing in digital technology and reengineering initiatives to achieve a high level of efficiency and productivity. Operating efficiency as of June 2020 improved with a cost-to-income ratio of 52.8%, better than the 62.7% registered last year. The annualized Return on Equity (ROE) also went up to 7.4% and annualized Return on Assets (ROA) to 0.9%.
The Bank’s P718.8 billion balance sheet was supported by an P84.4 billion capital base as of June 2020, with solid capital ratios—CAR of 13.9% and CET1 ratio of 13.0%. Total deposits rose by 19% to P499.4 billion, with a CASA ratio of 53%. The Bank's funding portfolio was further strengthened by the issuance of 2-year Peso Fixed Rate Bond offering in April and July 2020. Proceeds from these will be used to support the Bank’s asset growth, re-finance maturing liabilities, and fund other general purposes.
Its diversified customer loan portfolio continued to expand by 13% to P446.4 billion, led by the small and medium enterprises (SME) and consumer loan segments which registered year-on-year growth of 23% and 13%, respectively. The credit card business also grew, with credit card receivables accelerating by 21%, and card base of over 908,000 reflecting a 15% year-on-year growth. For clients with credit facilities and loans, the bank has implemented a payment reprieve during the enhanced community quarantine.
The Bank's Net NPL Ratio as of June was at 2.2%, slightly higher than the 2.1% recorded in the same period last year. Meanwhile, NPL coverage ratio significantly improved to 95.4% in June 2020 compared to 78.6% in June 2019 as the Bank aims to build sufficient buffers for COVID-related losses.
“It has been a difficult first half of the year, and we remain mindful of the challenges ahead. Hence, we’ve taken prudent steps to cushion the impact of this pandemic and at the same time, to continue serving our fellow Filipinos better by strengthening our digital capabilities, customer relief programs, and partnership with the government and other financial institutions,” RCBC President and CEO Eugene S. Acevedo said.
RCBC Serving Filipinos Digitally
In an aim to bring Filipinos to the fold of financial security and inclusion, the Bank continues to ramp up its digitalization efforts and create more relevant and responsive solutions to help its customers in their everyday banking and financial needs amid the changes brought about by the “new normal”.
It has beefed up the features of its mobile banking application which now includes digital end-to-end account opening, cardless ATM withdrawal, and sending of cash to remittance partners, among others. Furthermore, important functions such as payments, collections, and check warehousing were digitized to support its corporate clients in continuing their business operations. The Bank saw a surge in the usage and peso value of electronic funds transfer services, PESONet and InstaPay, in the first half of the year among new and existing customers.
“We do our best to adjust to the customers’ needs during these trying times. It can be challenging, but if we are able to provide ease and convenience in the way our customers do banking, it would be worth the effort,” Acevedo added.
As part of the Bank’s massive digital transformation, RCBC recently launched a new virtual banking platform called DiskarTech. It is the country’s first financial inclusion super app that offers vital services needed by unserved and underserved Filipinos. Its features include financial services that Filipinos need, such as savings, transfers, withdrawals and deposits, bills payment, insurance, loans, and telemedicine among others. More features will be introduced including microinsurance, and skills marketplace for enterprising Filipinos to help promote their businesses.
RCBC was recently recognized as the Best Digital Bank in the Philippines by Alpha Southeast Asia, a Hong Kong-based institutional investment magazine.