SOME of the country’s commercial lenders, particularly those that focus on consumption lending, get far more loan applications than they can process and have their hands full dispensing housing, cars and credit-card loans.
This was learned from Alfonso Salcedo Jr., president and chief executive officer at Security Bank Corp., who said in an interview that retail loan releases continue to be strong.
According to Salcedo, retail lending in the second half expanded nearly 16 percent, thus far after having actually grew by 19 percent in the first six months.
The robust expansion of consumption loans validate data from the Bangko Sentral ng Pilipinas showing bank loans in August expanding at the accelerated rate of 14.1 percent from only 13.6 percent in July.
“On our consumer lending, we’re not pushing that hard because the throughput of loan growth we’re seeing has outstripped our capacity to process them,” Salcedo, who’s only been at Security Bank for about half a year, said.
He anticipates generating net income of P7 billion by yearend, driven in the main by growth in its core business.
Salcedo, on looking at the lender’s core business, looks forward to a more profitable second half no matter that industry-wide trading gains was “not going to be there.”
“We are ahead of the budget. Last year we did P7.2 billion [net income] so maybe we’ll be around P7 billion
this year,” he said. He projected Security Bank’s loan portfolio, totaling some P220 billion at the moment, to have expanded to P240 billion by yearend.
“Our plan is, in the next five years, we want to double our loan book. If we can grow at a 20 percent range, we’ll be happy,” he said.
According to the executive, retail loan releases continue to be strong. The market demand for car loans has proven very strong. The bank’s auto loan is growing by more than 15 percent, while its credit-card business grew slightly below 15 percent.
All banks want to grow their consumer-lending business because, according to Salcedo, that’s where the highest margins come from.
The banks also want to grow the middle market because the margins there are higher.
He, likewise, said consumer lending, involving dispensing loans to small-and medium-scale enterprises, is growing faster than corporate banking.
“The growth is coming from the right segment. It’s a clear sign of the demographics of the country. The economy is growing and consumption continues to be healthy.
The battle is in the execution. Banks that can execute those strategic priorities will win,” he said.
He likewise said it is important for the banks to take advantage of where growth corridors are, mainly in the provincial areas.
Salcedo also anticipates a strong bancassurance business with joint venture partner FWD Life Insurance Corp.
Security Bank and FWD signed a partnership agreement in February and claimed the penetration rate reported by the branches were extremely high.
“The trajectory is to grow more than double the budget. The annualized premiums by the end of the year will be up 2.3 times the forecast. It’s a 9-digit annualized premium. Fee-based income has been growing. That’s extremely good,” he said.
The bancassurance product is offered in two thirds of the lender’s branches. He also sees the need to increase the number of financial sales agents to adequately service all its branches.
Security Bank has a network of 257 branches and 532 automated teller machines as of June 30.
The bank posted a net income of P 4.657 billion in the first half, higher by 29 percent than the P3.6-billion income posted in the same period last year.