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UNIONBANK is not keen on lending to small and medium
enterprises (SMEs) this year as borrowing rates go up
and double-digit inflation continues to threaten the
economy, according to bank chairman and CEO Justo Ortiz.
“We are
more cautious on SMEs. [We will not be increasing
lending in this area] unless we see a little more
stimulus on the part of the government. The budget
surplus is bad news. [This came when] the BSP is
tightening its monetary policy. The government needs to
loosen the fiscal policy,” he said in an interview at
the sidelines of Friday’s leadership conference hosted
by UnionBank at the Philippine Stock Exchange.
“Right
now, the cost of investment is higher. The capital of
SMEs has gone up,” he said.
Justo
said that right now, the bank is concentrating on
cutting back on operational expenses to increase its
lending capacity.
“The
challenge is for us to learn to mobilize savings more
efficiently so that we can address the needs of specific
sectors that portend vital social and developmental
implications, such as SMEs and microfinance. For
instance, our efforts to build our core low-cost
deposits brought our average deposit cost to 2.5 percent
from 3.3 percent,” he said.
He noted
that in the first quarter of the year, the bank’s
operating costs declined 7.8 percent to P1.2 billion
because of lower litigation expenses, as well as lower
taxes and occupancy costs after several branches were
consolidated.
It said
that after the cost-cutting in its first quarter, the
bank posted a 28.1-percent expansion in its loan
portfolio to P46.9 billion. Its capital adequacy ratio
remains at 14 percent against the 10-percent
requirement.
The
Philippines had a budget surplus of P769 million ($16.9
million) in June, official data showed. This means the
government is spending less to support the economy.
Justo
said that right now, the bank’s housing loans are still
growing, but are mostly granted to large corporations.
The bank
ended 2007 with a net profit of P2.9 billion, 15.5
percent higher than P2.5 billion from the previous year,
and against the industry’s 10.5-percent growth.
Its net
revenue went up 15.5 percent to P8.6 billion. Net
interest income increased by 15.5 percent, and
noninterest income, 14.8 percent.
It said
its earnings from auto and mortgage finance grew 7.6
percent to P985.7 million, while interest earnings from
its credit-card business rose 33.3 percent to P542.1
million. |
