Asset sale boosts RCBC profit in Q1

MANILA, Philippines — The net income of Rizal Commercial Banking Corp. (RCBC) jumped by 70 percent to P3.64 billion in the first quarter of the year from P2.14 billion in the comparable quarter last year, boosted by the windfall from the sale of various real estate properties.

The net interest income of the Yuchengco-led bank retreated by 9.7 percent to P7.28 billion from P8.05 billion, as the rise in interest expense outpaced the rise in interest earnings due to the combined effects of the increase in volume and rising interest rates.

The bank’s other operating income more than tripled to P5.73 billion from P1.85 billion as miscellaneous earnings reached P3.73 billion or almost eight times last year’s P479 million, largely on account of gains from the sale of various real estate properties.

Likewise, service fees and commissions increased by 26.6 percent to P1.42 billion from P1.12 billion on account of higher fee-based income led by credit card, loans and deposits, and digital fees, while foreign exchange gains reached P405 million from P24 million due to higher foreign exchange income from commercial transactions.

RCBC’s operating expenses grew by 22.3 percent to P7.19 billion from January to March this year compared with P5.88 billion in the same period last year on higher employee benefits, as well as payment for taxes and licenses.

The provision for potential loan losses dropped by 3.9 percent to P1.49 billion from P1.55 billion as asset quality showed marked improvement, returning to pre-pandemic levels at 1.99 percent net non-performing loans (NPLs) as of end-March.

Its total resources expanded by 20 percent to P1.2 trillion with the steady build-up of earning assets – customer loans up by 10 percent and investment securities higher by 27 percent.

Accounting for 18 percent of asset growth for the period, the bank’s loan portfolio focused on higher yielding segments, such as small and medium enterprises (SMEs), higher by 18 percent, consumer loans up by 14 percent, and credit card receivables higher by 46 percent.

Credit card billings increased by 67 percent, supported by the enhanced digital platform and features. In addition, data analytics allowed for strong acquisition in the first quarter, with 44 percent more new card issuances while keeping card delinquency rates within industry levels.

Supporting the asset build-up strategy was the solid increase in deposits by 27 percent to P859 billion, boosted by the 17 percent rise in CASA deposits.

“We are reinforcing our sales network to enable wider and efficient coverage, guided by data science and analytics to further understand customer needs and serve them better,” RCBC president and CEO Eugene Acevedo said.

Likewise, RCBCs capital improved by seven percent, keeping capital adequacy ratios above minimum regulatory requirements. With the upcoming P27.1 billion capital infusion from Japan’s Sumitomo Mitsui Banking Corp. (SMBC), the bank expects 300 to 400 basis points of uplift in common equity tier-1 (CET1) ratios to further support its asset expansion.

“There are many opportunities for synergy and collaboration with SMBC, some of which we have been actively pursuing in the past few months. By adopting SMBC’s global best practices, we seek to redefine banking as a whole and raise the bar for customer experience,” RCBC said.

As of end March, RCBC had a total consolidated network of 462 branches, 1,371 automated teller machines, and 1,784 ATM Go terminals strategically located nationwide.

Pan Malayan Management and Investment Corp., the holding company of the flagship institutions of the Yuchengco Group of Companies, has a 29.64 percent stake in RCBC, while Taiwan’s Cathay Life Insurance Corp. owns 22.19 percent.