By Carmelito Q. Francisco

DAVAO CITY — BDO Network Bank, the rural bank of BDO Unibank Inc., is looking at doubling its branches and offices to 480 within the next four years as the bank intensifies its lending to micro, small and medium enterprises (MSME).

Jesus Antonio S. Itchon, president of BDO Network Bank, which used to be One Network Bank, Inc., said the bank also aims to hit 300 branches and offices by end of the year, but stopped short of providing details.

Mr. Itchon said the bank will continue to concentrate on expanding in its base Mindanao, even as it has started penetrating Luzon and the Visayas following the buyout made by BDO in July 2015.

“We hope we can hit the target,” Mr. Itchon said. “Although we cannot say now how many branches will be put up in Mindanao in the next four years, rest assured that we will continue to look for areas to expand in the island.”

At present, the bank has 103 branches in Mindanao, 23 in the Visayas, and 24 in Luzon, while the rest are loan offices.

Karen L. Cua, BDO Network Bank senior vice president, said among the key areas the bank is concentrating on is growing its MSME loan portfolio. The bank offers a window where borrowers can obtain a loan of up to P500 thousand without collateral, depending on how viable the businesses are and how credit-worthy their owners are.

Ms. Chua said the bank’s MSME loan portfolio has reached about P2 billion since the bank opened this lending channel in October 2018 following clamor from both the government and small borrowers for access to funding for these kinds of businesses.

The average processing time for these types of loans, Ms. Chua said, is about three days, making the bank “competitive” with other providers.

“The reason commercial banks do not process micro loans is that for the same requirements, the amount involved is very small and the [processing] time is the same. So how can you provide small loans when you can only process so much for the same number of loans?” she added.

Both officials however said the financial and technical strength of its parent BDO has supported BDO Network Bank’s expansion.

The challenge for the bank in terms of technology, said Mr. Itchon, is that the “infrastructure in the countryside is very poor.”

Another challenge is that the country has yet to have a national identification system which will allow financial institutions to verify the identities of the persons trying to avail of their services.

“Until then, that would be the challenge in implementing credit checking,” he said.

He said these challenges have pushed the bank to continue expanding its footprints in rural areas as being present in communities helps it identify potential clients on its own, even when these borrowers, such as MSMEs, do not have credit ratings that could back their identities.