RCBC income up 35% to P724M in first 9 months

The Yuchengco-controlled Rizal Commercial Banking Corp. (RCBC) posted a net income of P724 million in the first nine months of 2005, up 35 percent from the P538-million earnings in the same period last year.

RCBC executive vice chairman and chief executive officer Rizalino S. Navarro said in a statement that the growth was attributed to the renewed focus at improving the bank’s bottomline.

Total resources stood at P160.27 billion, or 5.49 percent higher than the end-2004 level, but lower by 4.63 percent compared to the first semester this year.

"The lighter balance sheet was a strategic move to unwind expensive deposits and concentrate on increasing the bank’s profitability," Navarro said. "This also entailed improving the spreads on assets with marginal returns."

The above measures are aimed at improving RCBC’s asset quality and at the same time maintaining a core deposit base that assures respectable yields, the bank official said.

Total deposits remained steady at P109.8 billion in the first six months, complemented by the successful issuance of $150-million senior notes.

Last year, RCBC wrote off P2.8 billion in deferred tax assets to comply with PAS12/IAS 12 on income taxes that took effect in January.

Roughly P4.4 billion in non-performing loans (NPLs) were also sold to two special purpose vehicles (SPVs) in 2004. The importance of improving the quality of its assets led to another P2.1-billion NPL sale to ADM Macculus early this year.

Last month, RCBC issued preferred shares to allow new investors into the Yuchengcos’ universal bank.

By issuing preferred shares, the Yuchengco group will dilute ownership options for new investors. But it will still allow fresh capital through equity to enter its drying coffers.

RCBC vice chairman Cesar Virata said that they are willing to reduce equity control to only 51 percent.

Also at stake is the 17-percent equity control of the United Financial of Japan, a subsidiary of UFJ Holdings which earlier this year merged with the Mitsubishi Tokyo Financial Group.

The RCBC board issued non-voting, non-cumulative, convertible, non-redeemable, and participating preferred shares with a par value of P10 per share.

An additional investment of P805 million reportedly went to RCBC Capital Corp. including an earlier P400-million capital infusion still seeking approval by the Bangko Sentral ng Pilipinas (BSP).