RCBC posts P7.1 B profits in 2021
By Lee C. Chipongian
The net income of Yuchengco-controlled Rizal Commercial Banking Corp. (RCBC) increased to a record high of P7.08 billion in 2021, up by 41.1 percent from P5.02 billion in 2020, boosted by loans to the corporate and small business sectors.
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RCBC officials in a press chat on Tuesday, March 1, are confident the bank’s profitability will be sustained this year with positive results and that they see credit expanding “in the mid-teens” while bad loans or non-performing loans (NPL) ratio is expected to remain below four percent.
“We view the coming year with a very positive outlook (and we will) further strengthen our balance sheet and our internal processes,” said Horacio E. Cebrero, RCBC’s Treasurer and Head of Treasury Group, during the press briefing.
The bank’s NPL ratio has also “stabilized” at 3.3 percent in the last three quarters. The elevated ratio was due to the rise in consumer NPLs but remained controlled due to “tightened credit management”.
Cebrero, who is retiring, said the momentum for bank lending growth will be sustained as more sectors of the economy are opened up with easing lockdown measures. Loans, which they expect to hit double-digit growth this year, will be supported by data science for credit scoring.
RCBC Head of Corporate Planning Group, Christina P. Alvarez, said over the past four quarters, the bank has shown consistent growth in its core businesses but it will be difficult to forecast the pace of bank lending growth.
“That’s not easy to predict because you have May elections. But, I think what we have proven over 2021 is that the bank consistently every quarter builds up on its loan book ... We feel that this will be a steady growth notwithstanding May elections,” said Alvarez. Filipinos on May 9 will elect national positions including the next president and vice president of the Philippines.
For 2022, RCBC expects loan growth to pick up and the bank will be focusing more on energy-related projects particularly renewable energy, as well as infrastructure projects and data centers.
“We will probably see growth in our asset-base in the mid-teens. It will be a bit tempered this year but we still see strong growth (and see) pockets of opportunity across the board,” said Alvarez. She sees the same for loan growth in the mid-teens this year. “Overall, our profitability target should be consistent from 2021 to 2022,” she said.
On consumer and wholesale loans that are delinquent, Bennett Santiago, the bank’s Chief Credit Officer, said the NPLs have peaked in 2021 from the second half of 2020.
Santiago said delinquencies have been matched by loan loss provisioning and that the buildup of payment traction in terms of loan modification will reduce NPLs this year. “We expect to end the year roughly at below four percent (NPL ratio),” he added.
RCBC’s P7.08 billion profits in 2021 is the highest in five years. The record high came from core income which expanded as the bank built up loans and receivables mostly from the corporate, and the small and medium enterprises or SME sectors.
RCBC’s net interest income in 2021 increased by 9.7 percent to P28.83 billion while its fee income and operating expenses grew by 29 percent and 2.2 percent, respectively.
The bank’s assets and loans increased by 24.2 percent and 13.2 percent to P959.133 billion and P507.74 billion last year. Deposits also grew by 25.5 percent to P672.46 billion.
RCBC said the P4.5 billion capital infusion from Sumitomo Mitsui Banking Corp. “reinforced” its capital position with “solid capital ratios” or a capital adequacy ratio of 15.2 percent and CET1 ratio of 12.2 percent. Return on equity was at 6.7 percent by end-2021 and return on assets was at 0.8 percent. The bank’s capital stood at P111.08 billion, up by 9.6 percent year-on-year.
“We are committed to be at the forefront of delivering customer-centric innovation in the country. We remain focused on collaborating with our fintech partners to expand our arsenal of digital solutions. This will provide our clients an exciting and convenient banking experience,” according to RCBC President and CEO, Eugene S. Acevedo, in a separate statement on Tuesday. Presently, RCBC has a banking network of 434 branches, 1,245 automated teller machines, and 1,589 ATM Go terminals. It is the country’s sixth largest bank.
For this year, RCBC economist Michael Ricafort said they expect the growth momentum to continue and forecasts 6-6.5 percent GDP growth versus 5.6 percent in 2021.
RCBC also expects the peso will further weaken to P52 to P53 vis-à-vis the US dollar by the end of 2022 and will average at P51.50 to P52.50.
While inflation rate could stay within two-four percent target band for this year at 3.5 percent to four percent, the bank thinks the Monetary Board of the central bank will raise policy rates to 2.75 percent to three percent from its current two-percent level. All these predictions could result to a stock market index ending 2022 at 7,500 to 8,000.