City Savings Bank reevaluates expansion plans

Aboitiz Equity Venture's (AEV) thrift bank, City Savings Bank, is reevaluating its expansion plans for next year due to the volatile global economic performance.

However, the bank which is targeting the huge "teachers' market" in the Philippines is confident to hit its target revenue this year and in 2009, as teachers continue to need financial services whether crisis or without crisis, said CSB president and chief executive officer (CEO) Mikel Aboitiz.

This year alone, Aboitiz said CSB's loans grew by about 40 percent and with this development, the bank might consider its planned expansion next year by opening more branches in the key provinces nationwide, as well as establishing satellite branches in far-flung towns.

He reiterated though that as of now the bank is re-evaluating its plan as the threat of global meltdown is still there.

On the other hand, the reported increase on teachers’ salary next year is also expected to boost the bank's growth saying that "if teachers' salary increases, there are more reasons that they will need more financial services," like consumer loans, among others.

The bank had been able to get considerable share in capturing the "salary loan" market for teachers because of its attractive interest rates offer, providing teachers wider financial services options instead of opting to avail of non-bank loan packages like those offered by "loan sharks."

City Savings Bank earlier announced to open at least nine branches next year in other areas including Luzon.

 If the economic difficulties will continue, AEV chief financial officer Stephen Paradies said the company may re-consider some its planned expansions.

Paradies said there is a need for City Savings Bank to expand its reach because of its stronghold in providing loans for teachers nationwide.

Its stronghold in this niche market has provided the bank's good performance in 2007, contributing P63 million to AEV's income, which is an improvement of 32 percent compared to the previous year.

The bank recorded a 44 percent year-on-year growth in loans totaling P2.5 billion while total deposits grew by 61 percent hitting P3.2 billion. —Ehda M. Dagooc