One Network Bank posts record P428 M profit in 2011

MANILA, Philippines - One Network Bank (ONB), the country’s largest rural bank, posted a record P428 million net income last year, a growth of 37.62 percent from P311 million in 2010.

Total resources likewise expanded 33 percent to P15.7 billion, from P11.8 billion in 2010, the bank said in a statement.

Its net capital even stood at P2.5 billion during the period, higher than the minimum capital required by the Bangko Sentral ng Pilipinas (BSP) for commercial banks.

However, ONB president and chief executive officer Alex V. Buenaventura said the bank has no plans of applying for a commercial bank license.

“ONB will not convert to commercial banks status principally because of the lower three percent legal reserves required by BSP from rural banks as against the 21-percent legal reserves for commercial banks,” Buenaventura said.

ONB operates an 82-branch network in Mindanao. It has a branch in Metro Manila and is looking to expand to the Visayas region.

It operates 114 Megalink ATMs and is pilot-testing its new Internet banking service.

ONB is a product of 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. Last year, ONB completed and received regulatory approval for the consolidation of Rural Bank of New Corella Inc. into its network.

Meanwhile, the main driver of growth last year was the 72-percent expansion in loan portfolio from P6 billion in 2010 to P10.4 billion.

The biggest portfolio increase was realized from Mindanao government teachers under the DepEd-APDS Salary Loan Program.

As of end-2011, ONB’s exposure to 48,467 DepEd teachers reached P5.9 billion for a 109-percent increase over 2010.

Commercial loans to small and medium enterprises (SMEs) grew 78 percent, or from only P800 million to P1.4 billion last year.

Meanwhile, the P10.5-billion deposit liabilities recorded in 2011 represented an 11-percent increase from the P9.4 billion level in 2010. ONB has a total depositor base of more than 525,000 accounts.

Lower cost current and savings account (CASA) deposits account for 64 percent of total deposits.

Buenaventura said that a significant segment of the CASA deposits were the 360,000 PeraAgad Pinoy ATM cardholders.

“PeraAgad Pinoy has a popular opening and maintaining balance of only P100, making this convenient and affordable product among the small accounts especially in countryside areas all over Mindanao where ONB is in most cases the only provider of ATM machines,” the bank official said.

Non-performing loan (NPL) ratio stands at five percent while the non-performing asset (NPA) ratio was recorded at four percent as of end-2011.

Its capital adequacy ratio (CAR) remains very healthy at 20 percent, among the highest in the country’s entire banking system.