RIZAL Commercial Banking Corp. (RCBC) booked a higher net income in the third quarter on higher earnings from its core businesses.
The bank’s net income increased by 95% to P3.9 billion in the third quarter from the same period a year ago, it said in an e-mail on Thursday.
This brought the RCBC’s consolidated net profit for the first nine months to P10 billion, surging 88% from the same period last year and driven by a 29% growth in its gross income, it said in a disclosure to the local bourse.
RCBC’s consolidated return on assets was at 1.2% as of September and return on equity stood at 11.2%.
“The continued thrust towards customer centricity and digital transformation allowed the Bank to innovate, be more competitive, leading to sustainable growth,” RCBC President and Chief Executive Officer Eugene S. Acevedo said.
“We remain attentive to managing cost drivers vis-à-vis investments for the future,” Mr. Acevedo added.
Net interest income in the January to September period increased by 13% to P24 billion, supported by the growth in interest earnings from loans and investment securities.
Meanwhile, the lender’s non-interest income climbed by 92% to P10.6 billion, driven by higher retail transactions, foreign exchange gains, and miscellaneous earnings, including a property sale in September.
RCBC’s loan portfolio, which accounted for 51% of its total assets as of September, expanded moderately on the back of growth in the consumer and small-to-medium enterprise (SME) segments.
“Credit card balances grew 38% on the back of higher transaction volumes and data-driven portfolio actions. The SME portfolio sustained its upward momentum with a 17% year on year increase with nearly 13,500 valued customers,” the bank said.
Total deposit liabilities rose by 28% as the bank’s low-cost current and savings account deposits climbed by 13%. Time deposits also grew, the bank said.
The increase came on the back of new deposit products and cash management solutions, RCBC said.
The bank’s financial inclusion mobile app Diskartech also recorded a 63% or a P4.2-billion increase in transaction value following a double-digit expansion in its customer base.
RCBC’s cost-to-income ratio improved to 55% from 63% previously.
Provisions for losses decreased by 8%, with its nonperforming loan ratio at 2.15%.
The bank’s assets reached P1.1 trillion at end-September, representing a 23% year-on-year growth.
Its capital adequacy ratio was at 15.29% in the period while common equity Tier 1 (CET1) ratio stood at 12.3%. Both are above the regulatory requirements.
RCBC had a total consolidated network of 452 branches as of September. Since the start of the year, the lender has opened 19 new branches in key business areas.
SMBC HIKES STAKE IN RCBCMeanwhile, RCBC said in a separate disclosure that Sumitomo Mitsui Banking Corp. (SMBC) will hike its stake in the local lender to 20% through a capital infusion.
The bank said its board of directors approved the transaction on Thursday, which will bring in P27.126 billion in fresh CET1 capital to RCBC. The proceeds will be used to expand its business and invest in technology.
SMBC acquired a 4.999% stake in RCBC last year.
“The transaction involves SMBC acquiring an aggregate of 382,057,224 common stock at P71 per common share for a total consideration of P27.126 billion (approximately $460.78 million),” RCBC said.
Following the transaction, RCBC’s CET1 ratio is expected to improve to 15.93% on a pro-forma basis.
“SMBC’s strategic investment is part of the Bank’s capital raising plan to support long-term sustainable asset growth and investments in technology and cyber security and human resources,” RCBC said.
“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,” it added. “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.”
SMBC is one of the largest banks in Japan with ¥269.7 trillion in total assets and consolidated total capital ratio of 16.02% as of end-June. It is the commercial banking arm of Sumitomo Mitsui Financial Group (SMFG).
RCBC said the investment is in line with SMFG’s plans to expand in selected Asian markets, including the Philippines, Indonesia, Vietnam, and India.
“The transaction is expected to result to a stronger partnership, with RCBC and SMBC stepping into significant opportunities for synergy and collaboration,” RCBC said.
RCBC’s shares closed at P23.95 each on Thursday, up by P1.65 or by 7.40%. — K.B. Ta-asan