CSB’s time to shine has come after quarter of a century

THE Roaring 20s of the last century… Great Gatsby images of a carefree, exuberant, indulgent Flapper Era and Jazz Age. But the decade was also a time of great socioeconomic and political upheaval. The US recovered strongly from the horrors of World War I and progressed towards superpower status. But fully 60 percent of the population lived below the poverty line; modern conveniences like electric vacuum cleaners, elevators, airconditioning, ice boxes (forerunners of refrigerators) and automobiles were beyond them. The 1920s in fact ended with a whimper, as the stock market crashed in October 1929 and led to the Great Depression.

Over in the Philippine Islands, the Jones Law passed by the US Congress in 1916 presaged checkered efforts over the next decade to prove equal to the task of eventual independence and self-government. The period saw the emergence of the dapper, erudite Manuel L. Quezon as foremost Filipino politician amid the likes of F.B. Harrison, Leonard Wood and William Cameron Forbes, now better known as place and street names in Manila and Baguio.

Liminal spaces…the times between “what was” and “what’s next.” Places of waiting, of transitioning…of catching glimpses of something in the offing yet not quite knowing what’s to come. Like America a hundred years ago with the makings of a superpower. Or our country already flexing her economic and political prowess for the promise of independence, but still some ways off.

Fast forward to the new century: any hope or ambition to reprise the positivity of the Roaring 20s or the incurable optimism of a spanking new decade was soon dashed by the sudden, explosive eruption of Taal Volcano in January, serial earthquakes, onset of the Covid 19 pandemic in mid-March, and trainwreck of typhoons. With the economy in the throes of double-digit contraction wrought by a prolonged lockdown, businesses have had to adjust their business models or die trying. Recent fintech-driven stars of the sharing and sourcing industry like Grab and Lazada have boosted their presence in the burgeoning e-commerce and logistics space.

Quiet player

One such player, albeit well below the radar, is Citystate Savings Bank (CSB). While the much bigger thrift and universal banks have seen their profits slashed by bulked-up loan loss provisions and slowed-down lending, this middle-of-the-pack player has been quietly turning its fortunes around.

Undeterred by the massive business slowdown, CSB has reversed the deficits of the earlier part of the year to post steady month-to-month net profits from June thru September 2020. As a result, year-to-date Net Income reached P5.92 million, a P37.51-million reversal of its year-ago deficit. This newfound if modest profitability stemmed from cost discipline, a 9.6-percent improvement in total interest income of P155.82 million from loans, and extraordinary income of P15.77 million, an over threefold increase from a year ago. This is a prime example of a pivot that’s paying off: as loan demand decreased and credit quality deteriorated, the bank successfully monetized its acquired assets and booked net credit gains.

On the expense management side, CSB capitalized on the BSP’s determined monetary easing to reduce interest expenses by over P7 million year-on-year, a 20.25-percent drop. All told, non-controllable expenses dipped by almost P4 million (down 5.29 percent), and controllable expenses by over P8 million (down 11.98 percent).

For its part, the Bank’s balance sheet held steady and prudent. Management kept deposit liabilities at the P3-B level, given tepid requirements for loan funding and a major capital infusion by its shareholders (subject to regulatory approval): proof positive of the principals’ confidence in the Bank’s strategic growth and sustained profitability. The loan book hovered around the P2-B mark, mostly secured by hard collaterals, what with the Bank’s conservative risk/reward stance.

Leading the charge are newly minted Chairman D. Edgard A. Cabangon, President Benjamin V. Ramos, and Chief Operating Officer Jaime V L Araneta.

The period under review also witnessed the Board’s approval of CSB’s new (2021-2025) Strategic Plan, to be undergirded by a digital-first platform and automated credit decisioning and other support systems for its core business of lending (all subject to prior regulatory approval).

Turning the corner on profitability…getting a fresh vote of confidence from its shareholders…pivoting to prudent, timely revenue generation…forming an agile, customer-obsessed team . . .  laying the groundwork for the Bank’s future.

A liminal space is where all transformation takes place. Citystate Savings Bank has been learning, and waiting, for well-nigh a quarter of a century. It’s now on the cusp—of its time to shine!

2020 had its moments… 2021 bids fair to become much, much better.


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