RCBC sees strong profit recovery next year

MANILA, Philippines — Listed Rizal Commercial Banking Corp. (RCBC) expects to book a double-digit growth in earnings next year on the back of robust core businesses.

RCBC president and chief executive officer Gil Buenaventura said the country’s 8th largest bank in terms of assets sees its net income growing between 10 and 12 percent in 2018.

In the first nine months, the bank’s net income slipped 2.7 percent to P3.4 billion from P3.5 billion in the same period last year due to higher expenses.

“I think the September numbers were slightly above P3 billion, so we are right on track,” he said.

For next year, Buenaventura said the double-digit increase in net income would be fueled by the bank’s lending business that continues to track the industry growth of 20 to 21 percent.

Buenaventura expects RCBC’s loan growth to ease to 15 percent next year from the projected 17 percent this year

He explained the plan of RCBC to shift its focus on consumer lending, particularly auto and housing loans as well as lending for small and medium enterprises (SMEs), would translate to a slower loan growth next year.

“That is our thrust next year, less the big corporates and more on the SMEs and consumer loans,” Buenaventura said.

The bank president said RCBC would continue to ride the economic momentum as the country’s gross domestic product (GDP) has booked uninterrupted growth for 75 consecutive quarters.

The Philippines recorded a stronger-than-expected expansion of 6.9 percent in the third quarter from the revised 6.7 percent in the second quarter.

“The GDP growth is still good and consumer spending and consumption just tracks the GDP growth,” he said. Economic managers expect a seven to eight percent GDP expansion next year.

Likewise, Buenaventura said the passage of the comprehensive tax reform program would boost consumer spending in the country.

“The tax reform will I think translate to consumer spending, therefore, more need for housing, car, among others. I think it will be positive for everybody,” he said.

The official explained there is also less opportunities for trading next year with the impending interest rate hike.

“I think with the rise in interest rates there will be less opportunities for trading. So more income will be coming from the regular loans primarily. But there will be opportunities, there are small window opportunities for trading,” he said.

In terms of footprint, the group intends to open 15 branches next year including five for RCBC particularly in export processing zones as well as nine for RCBC Savings Bank.

“I think we are adequately covered nationwide and I think the key to business growth is really to make the branches more effective in cross selling,” he said.

Buenaventura, former president and CEO of state-run Development Bank of the Philippines (DBP) before replacing resigned RCBC president and CEO Lorenzo Tan, said the bank has moved on from the incident wherein it was used as a conduit to launder the $81 million stolen funds owned by Bangladesh Bank in Philippine casinos in February last year.

“Yeah, I think the numbers will show that after the incident the bank is making money and doing well. We just have to make sure that we do things better,” he said.