Rizal Commercial Banking Corporation (RCBC) posted a 16.5 percent growth in unaudited consolidated net income to P3.1 billion in the first half of 2020 from P2.66 billion in the same period last year despite higher provisions.
In a disclosure to the Philippine Stock Exchange, the bank said its provisions were boosted by 94 percent 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 3.5 times more than the provisions set aside last year, normalized for extra-ordinary items.
The growth in net income was primarily driven by the 25 percent increase in gross revenues to P20.9 billion from P24.86 billion as net interest income and non-interest income grew by 20 percent and 32 percent, respectively.
Core business continued its growth momentum complemented by the 49-basis point improvement in net interest margin to 4.3 percent.
In addition, favorable 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.
Total deposits rose by 19 percent to P499.4 billion, with a CASA ratio of 53 percent.
Its diversified customer loan portfolio continued to expand by 13 percent to P446.4 billion, led by the small and medium enterprises (SME) and consumer loan segments which registered year-on-year growth of 23 percent and 13 percent, respectively.
The credit card business also grew, with credit card receivables accelerating by 21 percent, and card base of over 908,000 reflecting a 15 percent year-on-year growth.
The Bank's Net NPL Ratio as of June was at 2.2 percent, slightly higher than the 2.1 percent recorded in the same period last year.
Meanwhile, NPL coverage ratio significantly improved to 95.4 percent in June 2020 compared to 78.6 percent 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.