MANILA, Philippines – One Network Bank (ONB), the largest rural bank in Mindanao, has reported that its total resources grew to a record P8.416 billion while its loan portfolio nears the P6-billion mark end March.
From just P6.869 million in March 2008, resources ballooned by 23 percent to P8.416 million after three months into 2009.
At the start of April this year, ONB’s branch network expanded to 75 from 70 at the end of 2008. Keeping in pace with the new branches, its automated teller machine (ATM) network likewise grew from 67 in 2008 to 83 entering April this year.
In fact, another five branch applications are in the pipeline as ONB wants to remain the widest banking network in Mindanao.
Total loan portfolio expanded by 22 percent in the first quarter of 2009, or from P4.826 billion to P5.893 billion. Total deposits reached P5.643 billion in the same period from P5.06 billion.
“This high loan growth was principally accounted for by significant increases in DepEd-APDS Salary Loans and by One Banana Program loans to cavendish banana small farmer growers,” Alex V. Buenaventura, ONB president, said.
Increasing loans are sufficiently covered by a loan loss provision of P258 million, which represents a 72-percent cover of the P357 million total non-performing loans (NPLs) end 2008.
“The impact of this wider branch network is that ONB was able to increase deposit liabilities by 12 percent from only P5.1 billion in the first quarter of 2008 to P5.6 billion by end March 2009. The same was able to fund 96 percent of loan portfolio (deposit-to-loan ratio), making ONB well leveraged while staying self-reliant in terms of funding loans with cheaper own funds versus the alternative of borrowings (bills payable) which are much more costly,” Buenaventura said.
In fact, 70 percent of ONB’s deposit liabilities represent CASA deposits, which are low cost funds versus only 30 percent in high-cost time deposits.
However, net income shrunk by 16 percent to P62 million in the first three months this year compared to the P74 million.
The ONB president explained that the principal reason for the lower income was the lower interest rate ceiling of 12 percent add-on rate that took effect in mid-2008 as imposed by the DepEd on APDS (automatic payroll deduction system) salary loans to teachers. Note that this lower yield covers a big volume of P2.3 billion in the first three months of 2008.
Nonetheless, the rural bank’s profitability remains very high.
Its risk-based capital adequacy ratio still high at 19 percent level, or almost double the 10-percent minimum requirement of the Bangko Sentral ng PIlipinas (BSP).
Stockholders’ equity rose to P1.374 billion, or 17 roughly increase over P1.188 billion of previous year. “Note that steady growth in networth is due to 100 percent stock dividend or plow back policy,” Buenaventura stressed.
Return on Private Equity (ROE) stood at 27 percent while return on assets (ROA) was registered at 3.23 percent.