ONB deposits expand to P7.4 billion

MANILA, Philippines - One Network Bank (ONB) has recorded a 26-percent increase in its deposit levels, or from P5.85 billion in the first six months of 2009 to P7.38 billion this year.

Likewise, net income expanded by a whopping 32 percent in the first semester of 2010, or from P103 million in the same period last year to P136 million.

ONB president and chief executive officer Alex V. Buenaventura attributed the huge growth of deposits to the large number of branches spread all over Mindanao, the low entry level for savings deposits, the popular automated teller machine (ATM) cards, and the wide acceptance of time deposits.

The P1.5-billion increase in deposits volume came mainly from savings depositors who contributed an additional P900 million or 29-percent increase against last year’s level. The largest rural bank in Mindanao has a wide small depositor base of more than 590,000 accounts at the end of June 2010.

Over the last year, an average of more than 5,000 new accounts have been opened mostly by small depositors that opened either the affordable PeraAgad ATM Pinoy Card and the regular savings account. This is made convenient by the ONB’s branch network of 75 branches.

It will be opening another five branches within the next six months of the year in Samal City, Davao City, Misamis Occidental, Zamboanga del Sur, and Zamboanga City. Its ATM network expanded to 96 units, both offsite and on branch.

The second major contributor to the increase in deposits is the 34-percent growth in time deposits.

“Relative big depositors or high net-worth clients have developed the confidence in trusting their money with a big rural bank like ONB,” Buenaventura explained.

The large amount in deposits likewise allows the bank to expand treasury income.

The bank president explained that treasury gains first reduced bank’s interest expenses on bills payable to a negligible amount by paying off almost all rediscounting borrowings from various creditor banks.

“Treasury then traded low-yield government securities into higher-yield government securities provided with back-to-back credit lines as a hedge for future liquidity requirements,” he added.

Loans however contracted by six percent to P5.5 billion.

Total resources grew by 11 percent to P9.48 billion end July this year from P8.6 billion in the same period in 2009.

Non-performing assets (NPAs) improved to four percent of total lending while non-performing loans (NPLs) remained constant at six percent.

Thus, the bank’s capital adequacy ratio (CAR) stood at a healthy 25 percent at the start of the second semester of 2010 from 20 percent at the start of the year.

Return on private investments increased to 27 percent while return on assets was constant at three percent.