One Network Rural Bank eyes 50% growth in net earnings this year

Newly-consolidated One Network Rural Bank is looking to gain a combined net income growth of over 50 percent, or from P135 million at the end of 2003 to P215 million this year.

One Network Rural Bank is a three-way consolidation between Network Rural Bank (Davao del Sur) Inc., the Rural Bank of Panabo (Davao del Norte) Inc., and the Provident Rural Bank of Cotabato (North Cotabato) Inc.

With a combined total assets of P2.65 billion and a deposit base of over 250,000, One Network may be the biggest rural bank in the country today.

Alex V. Buenaventura, Network Bank president and designated spokesperson for One Network said 2004 remains part of the consolidation period for the new rural bank. It is completing online connections with all the 46 branches located in the Mindanao region and a few in the Visayas.

"We are basically 80-percent complete. The bank can move forward albeit gradually. It is not easy to get three banks, their respective boards and cultures together," Buenaventura said.

The new board will be composed of 14 members divided into seven voting regular members and seven non-voting "Council of Advisers." In turn, the seven regular members are composed of three from Network Bank, one each from the Rural Bank of Panabo and Provident Rural Bank, and two independent members.

Total deposits stood at P1.95 billion at the start of 2004 and One Network is looking to let it grow by over 20 percent to P2.35 billion by end year. Average deposit size is estimated at P7,568.

Likewise, total loans stood at P1.54 billion by end 2003 and envisioned to grow by 46 percent this year to P2.25 billion.

The consolidated rural bank has a portfolio at risk (PAR) of P110 million in end 2003 and it is expected to stand at P115 million by yearend. The PAR is the total outstanding principal balance of all unpaid loans as of maturity date plus outstanding principal balance of loans whose unpaid installments due exceeded the minimum required number of installments in arrears.

With a paid-up capital of P422 million, One Network is now empowered to transact money changing activities.

It can now buy and sell foreign currency.

When it achieves a paid-up capital of over P650 million, it could apply for a foreign currency deposit unit (FCDU) license.

It is also allowed to directly deal with the Philippine Clearing House Corp. (PCHC) and thus issue its own checks.

"That means faster business opportunities for our client base especially the entrepreneurs," Buenaventura said. It should also free-up two-thirds of the reserves placed with its clearing bank.

Meanwhile, officials of One Network is encouraging rural banks to consider undertaking consolidation in place of mergers or closures in coping with the capitalization requirements of the Bangko Sentral ng Pilipinas (BSP) and the harsh economic conditions.