Chinatrust to undertake limited expansion

Chinatrust (Phils.) Commercial Bank Corp. (Chinatrust Phils.) will be entering a period of consolidation with limited expansion next year, its newly-installed president said yesterday.

Joey A. Bermudez, who was formally named Chinatrust president said yesterday, the bank would be diversifying its customer and revenue base in 2002.

"Next year is more of a consolidation period. It is a time for diversifying our customer and revenue base. We have built a good franchise in our corporate banking as well as in serving the financial needs of our Taiwanese customers in the Philippines," Bermudez said.

He said the Taiwan-based commercial bank will continue to provide cash management services to its corporate clients which comprise its strongest niche. The bulk of its corporate clients consists of Taiwanese firms doing businesses in the Philippines.

Chinatrust is the bank of choice among Taiwanese firms doing business in the Philippines, but "we are diversifying the business," Bermudez said.

The bank hopes to undertake limited expansion into consumer banking and middle market business, which includes the credit card business and retail lending like home and salary loans. Its present branch network numbers 18.

"With the BSP moratorium, we can not just open new branches. Nonetheless, we are taking an opportunistic stance towards expansion. We are not pursuing it but we are open to possibilities and that it should fit our overall strategy," Bermudez said, adding that their immediate target would be urban centers outside Metro Manila and Luzon.

While the moratorium is in force, the BSP is lenient in opening new branches through acquisition.

A bank, like Chinatrust, can acquire an existing branch of for example a thrift bank but not the bank itself. Likewise, banks entering the microfinance sector are allowed to open branches.

Bank chairman Jeffrey L. S. Koo said they will continue to "freeflow" 90 percent of its stocks as the requirement of the Philippine Stocks Exchange (PSE) for a minimum 20-percent public ownership has been suspended indefinitely.

Koo said they await further instructions from the PSE even as he pointed out that the mother unit in Taipei has no plans of increasing the capitalization of the Philippine subsidiary.

"Our intention is to provide services without any additional capitalization. That is because our non-performing loans (NPLs) remain among the lowest not only among the local banks but also the foreign banks operating in the Philippines," he explained.

The banks’ NPLs reached only 6.45 percent of total loans at the end of the third quarter, which is an improvement from the 7.94-percent end-July. The average NPL of the country’s commercial banking sector is 17.92-percent.

Portfolio loan growth was placed at 10 percent as of end September this year compared to the same period last year. Net loan portfolio in 2000 reached P7.56 billion. The bank’s asset base was P12.6 billion in 2002. Both Koo and Bermudez estimated that net profits would grow by 25 percent this year.