Sumitomo Mitsui Banking Corporation (SMBC) is investing an additional P27.13 billion to increase its stake in Rizal Commercial Banking Corporation which has just reported an 88 percent jump in profits in the first nine months of the year.

In a disclosure to the Philippine Stock Exchange, RCBC said its Board of Directors has approved the increase in the shareholding SMBC from 4.999 percent to 20.0 percent through the combined sale and subscription of 382.06 million RCBC shares.

The transaction involves the sale to SMBC of 213.44 million common stock held as treasury shares in the Bank and the issuance to SMBC of 168.62 million new common stock, at the price of P71.00 per share.

Abacus Securities Corporation noted that the price is more than triple the current share price and about 1.5 times its book value per share. It is also a 61 percent premium to the price SMBC paid for its initial 4.999 per cent stake acquired in June last year.

SMBC’s strategic investment, infusing about $460.78 million of new Core Equity Tier 1 capital to the Bank, is part of RCBC’s capital raising plan to support long-term sustainable asset growth and investments in technology and cyber security and human resources.

The proceeds from the investment will allow the Bank to expand the core business in key customer segments -- Corporate, SME and Consumer segments, and retail markets such as high net worth customers, mass affluent and mass market segments.

SMBC’s strategic investment will also enhance the Bank’s digital plans and is expected to extend the reach of RCBC’s Sustainable Finance Framework.

Meanwhile, RCBC reported an unaudited consolidated net income of P10.1 billion for the first nine months of 2022, an 88 percent increase from the same period last year attributable to the 29 percent improvement in gross income.

Net interest income went up by 13 percent to P24.0 billion, fueled by growth in loans and investment securities.

Non-interest income rose by 92 percent to P10.6 billion, which was mainly attributable to higher retail transactions, foreign exchange gains, and miscellaneous income, that includes gains from a property sale in September.

The Bank’s total assets reached P1.1 trillion by the end of September, representing an expansion of 23 percent year on year.

The bank's loan portfolio, which accounts for 51 percent of total assets, has risen moderately with the consumer and SIDE segments leading the growth.

Credit card balances grew 38 percent on the back of higher transaction volumes and data-driven portfolio actions.

The SME portfolio sustained its upward momentum with a 17 percent year on year increase with nearly 13,500 valued customers.

Total deposits increased by 28 percent, coming from low-cost CASA deposits, higher by 13 percent, and time deposits.

"The continued thrust towards customer centricity and digital transformation allowed the Bank to innovate, be more competitive, leading to sustainable growth," RCBC President and CEO Eugene S. Acevedo said.

New deposit products and innovative cash management solutions brought in new customers and boosted usage among clients. The bank's financial inclusion app, Diskartech, posted a 63 percent or P4.2 billion increase in transaction value following a double digit year-on-year customer base expansion.

The Bank's cost-to-income ratio improved from 63 percent to 55 percent, while the increase in overall business volume contributed to an uptick in variable expenses.

Moreover, provision for impairment losses decreased by 8 percent as asset quality continued to improve, with net NFL, ratio easing to 2.15 percent.

"We remain attentive to managing cost drivers vis a vis investments for the future," Acevedo added.