AFTER booking a 7-percent net income decline in 2020, Rizal Commercial Banking Corp. (RCBC) is aiming to register double-digit growth this year, banking on better macroeconomic conditions as more business activities resume.
“Our target is still to grow double-digit—that is one thing we want to achieve,” RCBC Corporate Planning Head Ma. Christina P. Alvarez said in a briefing on Tuesday.
Alvarez explained that provisions for potential credit losses are likely tempered this year because nonperforming loans (NPLs) already peaked in 2020. With this, the RCBC official said that “better growth” is expected in 2021, but noted it was still too early to tell the actual profit guidance of the bank for the year.
Last year, RCBC explained that impairment losses—which grew by 26.1 percent to P9.33 billion—dragged its bottom-line figures to P5.018 billion, much lower than the P5.388 billion registered in 2019.
Still, gross income improved by 6 percent to P37.9 billion year-on-year on the back of robust core businesses. Net interest income rose by 18 percent to P26.3 billion for the period due to lower funding costs and higher margins.
Loan portfolio increased by 5 percent to P456.6 billion last year. This was supported by the 8-percent and 5-percent growth in small and medium enterprises and consumer loan segments, respectively. NPL ratio stood at 2.9 percent as of end-2020.
The RCBC official is expecting more opportunities for growth in its loan book this year. “Continuing with what we have been doing last 2020, we will build on accrual income,” she said.
Alvarez also said that the bank already has frontloaded the loan loss provisions in the fourth quarter last year, which are enough to cover 2021 operations.
Deposits, meanwhile, grew by 17.3 percent to P535.788 billion last year from P456.581 billion in 2019, with Alvarez explaining that current and savings accounts increased in the fourth quarter of 2020.
With process reengineering and rationalization efforts, RCBC noted that loans and deposits per branch ratio improved by 24 percent and 33 percent, respectively, last year.
As of end-December 2020, total assets and capitalization stood at P770.8 billion and P101.5 billion, respectively. Capital adequacy ratio and common equity tier 1 are currently at 16.1 percent and 12.6 percent, respectively.
Return on equity stood at 5.6 percent while return on assets reached 0.7 percent last year. “At the end of the day, we ended the year with a strong financial position, with acceptable returns for the shareholders,” RCBC Treasurer Horacio E. Cebrero 3rd said.
Bond issuance for 2021
RCBC is eyeing to launch benchmark sized foreign currency denominated senior note offering this year, Cebrero confirmed, looking initially at a size of $300 million depending on the bank’s asset build up.
He confirmed that the board of directors greenlighted the planned venture to the foreign bond market, which will be drawn out of its medium-term note program, last February 22.
“We deem it proper at this point, looking at how the market is developing, to get approvals ahead,” the RCBC treasurer said. “We don’t have a set timetable; we are still assessing the market.”
The offering, which could potentially be launched by second quarter or beyond, may offer green or sustainable financial instruments, he said.
“If there is a good opportunity for us to go out to international market, then we will go for it,” Cebrero said.
In August last year, the Yuchengco-led bank made a debut in the offshore bond market with its $300-million Reg S issuance. The proceeds of the offering were allocated to finance asset growth and other general corporate matters and to maintain enough reserves above the minimum requirements by the Bangko Sentral ng Pilipinas.
RCBC shares ended flat at P17.30 each amid the 0.06-percent rise for the benchmark index on Tuesday.