RCBC books higher profit in 2nd quarter
RIZAL COMMERCIAL Banking Corp.’s (RCBC) net profit more than doubled in the second quarter, supported by an increase in its net interest income and lower provisions for loan losses.
The bank’s net income in the second quarter stood at P1.747 billion, surging by 117.83% from P802 million in net earnings recorded a year earlier, based on its financial report released on Monday.
This brought the bank’s net profit in the first half to P3.327 billion, up 7% from the P3.11 billion booked in the same period a year ago.
“Despite lower trading and foreign exchange gains, our core income is gaining momentum to support the bottom line,” RCBC Corporate Planning Head Ma. Christina P. Alvarez said at an online briefing.
The bank’s first-half performance translated to a return on equity of 6.55%, down from 7.43% a year ago, while return on assets also slipped to 0.84% from 0.86%.
RCBC’s net interest income in the second quarter increased by 9.6% to P7.118 billion from P6.494 billion, backed by the 30.7% decline in its interest expenses to P2.111 billion from P3.049 billion a year earlier.
Its lower expenses helped offset the 3.29% drop in its interest income to P9.229 billion from P9.543 billion, which was mainly due to a 7.8% decline in earnings from loans and receivables to P8.109 billion. Meanwhile, income from investment securities rose by 85.8% to P840 million.
RCBC’s net interest margin was at 4.08% as of June from 4.28% in the comparable year-ago period.
Meanwhile, non-interest income by fell 61.4% to P1.685 billion from P4.371 billion a year earlier, mainly dragged by trading gains which slumped by 95% to P163 million. On the other hand, services fees and commissions climbed 49.2% to P1.04 billion, while the bank recorded foreign exchange gains of P28 million, reversing the P43-million loss booked a year ago.
“Trading and foreign exchange gains were significantly higher in 2020, and we do not expect the same levels of trading gains in 2021,” Ms. Alvarez said.
On the other hand, other operating expenses inched up 0.3% to P5.473 billion in the second quarter from P5.454 billion a year ago.
Provisions for impairment losses declined by 61.24% to P1.396 billion in the second quarter from P3.602 billion.
RCBC’s loans and receivables grew 3.6% to P497.851 billion as of June from P480.282 billion in the same period of 2020.
Ms. Alvarez attributed this growth to a rise in corporate and small- and medium-sized enterprises (SME) loans. She said they will continue to target top corporations, select SMEs and select areas outside Metro Manila.
As its portfolio expanded, the bank’s nonperforming loan (NPL) ratio also inched up to 3.25% from 2.24% a year ago.
RCBC Head of Credit Management Group Benett Clarence D. Santiago said the bank’s NPL ratio has likely already peaked, as it has been declining as of July.
He added that although the fresh lockdown poses a risk to the bank’s performance, the rate of vaccination should help “to compensate in a big way.”
Meanwhile, on the funding side, RCBC’s deposit liabilities increased 19.8% to P598.145 billion as of June from P499.42 billion in the same period of 2020.
The bank’s assets rose by 18% to P845.8 billion as of June from 718.752 billion the year prior.
Its capital adequacy ratio stood at 15.07% as of end-June, up from 13.87% a year ago, while its common equity Tier 1 ratio was at 11.84%, down from 12.99% last year. Both remained above the minimum regulatory requirements.
As of June, RCBC had a total consolidated network of 434 branches, 1,272 automated teller machines, and 1,535 ATM Go terminals.
RCBC’s shares closed at P19.79 apiece on Monday, up by 18 centavos or 0.92% from its previous finish. — L.W.T. Noble
