RIZAL COMMERCIAL Banking Corp. saw its net income decline in 2020 as it ramped up loan loss reserves amid the coronavirus crisis. — BW FILE PHOTO

RIZAL COMMERCIAL Banking Corp. (RCBC) booked a lower net profit last year as it boosted its loan loss reserves amid the coronavirus crisis.

The lender’s net income fell 7% to P5 billion in 2020 from P5.388 billion a year earlier, RCBC First Senior Vice-President and Corporate Information Officer Ma. Christina P. Alvarez said in a briefing on Tuesday.

Provisions for credit losses rose 2.5 times to P9.3 billion last year as the bank sought to “manage the higher risks due to the pandemic and economic slowdown,” Ms. Alvarez said.

“We have ensured that we have more than adequate liquidity and more than enough capital buffers,” RCBC Senior Executive Vice-President and Treasurer Horacio E. Cebrero III said in the same briefing.

In the fourth quarter alone, RCBC’s net profit improved 14.2% to P1 billion from P876 million in the last three months of 2019.

“We saw our CASA (current account savings account) move up significantly and our investment securities move up significantly in the fourth quarter,” Ms. Alvarez said.

Meanwhile, the bank’s gross revenues rose 6% to P37.9 billion in 2020 from P35.9 billion in 2019.

Net interest income also jumped by 18% to P26.3 billion last year amid a decline in funding costs and higher margins.

The bank’s loan book expanded 5% to P456.6 billion as the small and medium enterprises (SME) and consumer segments recorded increases of 8.5% and 5%, respectively.

“We believe that there are opportunities for growth in the loan book in 2021, so that will be for accrual income,” Ms. Alvarez said.

Amid the crisis, the bank’s nonperforming loan ratio inched up to 2.9% from 2.15% in 2019.

Total deposits reached P535.8 billion driven by the 21% expansion in its CASA deposits.

On the other hand, RCBC’s operating expenses in 2020 inched up 1.4% year on year to P22.1 billion. The bank embarked on rationalization efforts amid the pandemic, which caused its cost-to-income ratio to improve to 58.3% as of December 2020 from 60.8% a year earlier.

The bank’s capital adequacy ratio stood at 16.1% while its common equity Tier 1 ratio was at 12.6% as of end-December, both beyond the regulatory minimum.

Meanwhile, return on equity and return on assets were at 5.6% and 0.7%, respectively.

RCBC officials said an expected improvement in fee income as well as changes to their operations will help boost the bank’s net profit this year.

“If you get it right on operational efficiency, this will be a very big contributor to your net income. So we continue to focus on that — be it on customer focus or operating efficiency inside the bank,” Mr. Cebrero said.

RCBC President and Chief Executive Officer Eugene S. Acevedo earlier said they shut down 66 branches in 2020 as branch transactions declined and online banking gained ground during the pandemic.

The bank will continue to reap benefits from its “rationalization efforts” in 2021, Ms. Alvarez said.

“We also believe the volume of transactions will be increasing in 2021. There will be more business activities so that will feed into fee income,” she added.

Last year, RCBC launched its Diskartech app which offers digital services including a basic deposit account meant to lure the unbanked. Ms. Alvarez said the app will likely see higher usage once they launch loan offerings through the platform in the latter part of 2021.

RCBC shares closed unchanged at P17.30 apiece on Tuesday. — Luz Wendy T. Noble