RCBC to focus on SMEs to boost loan growth

MANILA, Philippines - Yuchengco-led Rizal Commercial Banking Corp. (RCBC) is set to focus on the small and medium enterprise (SME) market to boost the bank’s loan growth.

“Our focus is to grow the SME lending,” RCBC president and chief executive officer Lorenzo V. Tan said in an interview with The FREEMAN. 

Tan said he believes the bank has a lot of room to grow its SME lending because of prospects that business expansion would continue.

Tan recognizes the need of SMEs for financing to make them grow and become more competitive amid the integration of Association of South East Asian Nations (Asean).

He added the bank believes in the potential of SMEs that could eventually become large corporations.

As of end-June this year, RCBC’s SME loan portfolio stood at P25 billion, the bulk of which went to wholesale and retail trade, construction and real estate, among others. The lender targets to grow SME loans, which now comprise 12 percent of its total loan portfolio, by 30 percent this year. 

The Yuchengco-led bank had reported its core lending business expanded by 18 percent to P275.7 billion as of June, with corporate, consumer and SME market segments sustaining their growth. 

“We know we are in the business of managing risk while providing opportunities. That’s why we provide capital to the SMEs,” Tan said. 

In a separate interview, Rommel S. Latinazo, president and CEO of RCBC Savings Bank, said it’s an opportunity for the bank to finance the business expansion of SMEs as the economy grows. 

“Business climate has been favorable. We see a number of business expansions and therefore when you expand, there’s a need for financing,” Latinazo noted. 

Latinazo also said the thrift bank’s loan portfolio is growing by more than 20 percent with auto and home mortgage as drivers. The thrift bank’s loan portfolio stood at P54.7 billion as of March this year, buoyed by its core consumer loan business.  

The official noted 55 percent of RCBC Savings’ total loans is for home mortgage loans, 35 percent is for auto financing and four percent is intended for SME loans. 

Latinazo explained a reliable credit information system is needed to ease SME bank financing. 

“For you to lend, you need to know your customers and understand their business and their financial condition. There’s a need to improve on that and slowly we’re improving,” the bank executive said.  

He said dealing with banks is more “efficient and economical” for SMEs, considering that lending rates of banks are more affordable than those of informal lenders.

As of end-May, RCBC Savings’ distribution network comprised 150 branches and extension offices and 405 automated teller machines (ATMs). 

In the first semester this year, the thrift bank posted a P373-million profit, lower compared to P466.7 million it booked in the same period last year. 

Moreover, its parent bank RCBC’s network increased to 450 branches while its ATMs rose to 1,208 as of the first semester. The listed lender is currently the country’s sixth largest commercial bank in asset terms.

RCBC’s unaudited consolidated net income in the first half this year  went up by 25 percentP2.53 billion from P2.02 billion it earned in the same period in 2014.

During the period, deposits with the bank reached P321.9 billion while total number of accounts also expanded to 6.9 million from 6.3 million as of first half last year.