JP Laurel Rural Bank focuses on microfinance

MANILA, Philippines - The Pres. JP Laurel Rural Bank is being transformed into a rural bank focused on microfinance. The Rizal Commercial Banking Corp. (RCBC) acquired the Batangas-based rural bank recently as part of its expansion plans.

JP Laurel Bank will however retain its rural bank license since RCBC wants to service the retail and consumer market as well as the small and medium enterprises (SME). Batangas and the rest of Southern Luzon is a developed region with an unlimited potential for banking activities.

“This is the first time that a major commercial bank is going down to the ground, and extending directly to microborrowers in a big way, with JP Laurel Bank as the vehicle,” Ma. Lourdes Jocelyn S. Pineda, RCBC senior vice president and head for microfinance operations, told The STAR.

Pineda revealed that they have already completed a market survey in two pilot areas (Tanauan and Cabuyao) where two branches are located. Another eight are ongoing covering areas where another eight of the bank’s branches are located.

JPLaurel Bank has 10 branches, of which eight are located in Batangas, another in Mindoro and another in Laguna.

The first two microfinance products to be rolled out is micro working capital and micro-insurance. It will happen in the second semester of 2009.

By the first quarter of 2010, all branches will introduce the Pitaka.

The micro working capital and micro-insurance will be a mainstay for JP Laurel Bank. But they will also be introducing other microfinance products depending on the demands of the specific areas. In the drawing board are microloans for agriculture and for housing.

Of course, the core banking activities like deposit-taking and retail lending will continue.

All its microfinance products will fall under the brand name Pitaka (wallet).

Pineda proudly boasts that the name was a result of a contest among the present staff of JP Laurel Bank, with RCBC officials acting as judges. A total of 65 entries were submitted.

RCBC is determined to keep most if not all the present personnel of JP Laurel Bank. But it will also be introducing new systems.

And one of the first things is an information technology (IT) system for microfinance, for speed, efficiency.

“We are presently screening four providers. We will bring in something that is not yet in the Philippines. It will be technology that introduces simplified yet efficient systems that will make use better and faster than the competition,” the RCBC microfinance specialist said.

Southern Luzon is a region exploding with branches of major commercial banks, thrift banks and rural banks, not to mention leasing and cooperatives of all persuasions.

In the microfinance field, JP Laurel Bank will be competing with rural banks with similar orientations. And some of these are supported by the United States Agency for International Development (USAID).

The Microenterprise Access to Banking Services (MABS) program in the Philippines is a joint effort between the Rural Bankers Association of the Philippines (RBAP) and the USAID. It is one of the most successful microfinance programs in the country with citations from international agencies for microfinance.

In fact, Pineda is a product of the MABS when she was running the Rural Bank of Sto. Tomas based in Davao.

For several years, she worked with the Accion International/Accion Technical Advisors India as principal microfinance advisor/senior director.

Somewhat similar to the MABS approach, JPLaurel will deal with the microentrepreneurs on an individual basis, versus the group method. It is effective in the semi-urban and urban areas where there are a lot of transients, thus the need to deal with them individually.

Group dealings have the number, but in terms of portfolio size, the group is smaller. “Individual loans are usually bigger, as the microborrower can go up to P150,000, the ceiling set for individual micro-borrowing by the Bangko Sentral ng Pilipinas (BSP),” the RCBC executive said.

RCBC acquired JP Laurel Bank early this year after completing the integration of Merchants Savings and Loan Association Inc., a thrift bank with 21 branches.

“The opportunities are endless in the consumer and middle markets,” Lorenzo V. Tan, RCBC chief executive officer said, emphasizing the bank’s aggressive posture of acquiring more thrift and rural banks.

For the past three years, RCBC has been aggressive in branch expansion, acquisitions, ATM deployment, and the introduction of new or improved convenience and consumer banking products.

“We want to grow out retail banking income by another 40 percent with our loan portfolio growing by 20 percent coming mainly from consumer lending,” Tan said.

Customer base is targeted to reach over a million this year, and balloon to five million by 2011.