RIZAL COMMERCIAL Banking Corp. (RCBC) posted a net income of P800 million in the second quarter on the back of strong trading gains, offset by higher loan loss provisioning.

The bank saw a boost in trading gains last quarter, but this was partly offset by higher provisions that reached P3.6 billion, RCBC Corporate Information Officer Ma. Christina P. Alvarez said in an online press briefing on Wednesday. Comparative data was not available as of writing.

In the first half, RCBC’s net income jumped 17% from a year ago to P3.11 billion, buoyed by double-digit growth in revenues and loans.

The lender’s net interest income jumped 20% year on year to P12.794 billion in the first half, while the bank’s other income also increased by 32% to P8.063 billion. Its gains from trading and foreign exchange activities grew 81% to P5.904 billion.

The central bank’s move to lower interest rates helped the bank bring down its funding costs, Ms. Alvarez said, giving its net interest income a boost during the period and allowing its Treasury department to “maximize the value of the investment portfolio.”

“The quarantine limited and reduced the volume of transactions in the branches and as a result, other income components showed a decline versus last year,” she said.

The lender’s loan portfolio expanded by 18% to P480.282 billion in the semester after posting double-digit increases in all three segments. Its net interest margin rose to 4.3% from 3.8% in the same period last year.

Broken down, RCBC’s corporate loan book, which made up 53% of the total, grew 11% year on year, while consumer loans which cornered a 30% share jumped 13%. Meanwhile, credit taken out by small and medium enterprises (SME), which accounted for 17% of the total, surged 23%.

The lender’s nonperforming loan (NPL) ratio inched up to 2.2% from 2.1% a year ago while its bad loan cover ratio also rose to 95.4% from 78.6%.

The increase in its NPL ratio was largely due to the strong growth in consumer and SME loans, Ms. Alvarez said, adding they do not expect the level to change “significantly” amid the pandemic.

She said the bank has been reaching out to the customers to check on their status and offer payment options to help them keep their accounts active.

“Without any interventions, maybe NPL levels could double, but we’re not going to let that happen because we are working with the customers very closely to fix their cash flow and ensure the healthy condition of their loans,” Ms. Alvarez said.

The bank set aside P5.2 billion as provisions for potential losses in the first half, up 94% from a year ago, amid the ongoing coronavirus pandemic.

“We’ve actually accelerated the provisioning estimate already in the first half so this is already going to be the bulk of it — probably 70% already of what we plan to provide,” she said.

The bank’s operating expenses also inched up 4.8% to P11.01 billion.

Meanwhile, deposits grew 19.3% to P499.42 billion, with a 53% current account, savings account ratio.

“It has been a difficult first half of the year, and we remain mindful of the challenges ahead. Hence, we’ve taken prudent steps to cushion the impact of this pandemic and at the same time, to continue serving our fellow Filipinos better by strengthening our digital capabilities, customer relief programs, and partnership with the government and other financial institutions,” RCBC President and CEO Eugene S. Acevedo said in a statement. 

“We entered this pandemic period with a strong balance sheet. We posted positive growth in all fronts while maintaining a healthy financial statement, with a strong capital base and allowing us to expand our balance sheet doing more business in the coming periods,” said Horacio R. Cebrero, the treasurer and head of RCBC’s Treasury Group.

The bank’s cost-to-income ratio improved to 52.8% as of June from the 62.7% posted the year prior.

Its annualized return on equity and return on assets stood at 7.4% and 0.9%, respectively.

RCBC’s assets grew 7% to P719 billion as of June.

The bank also recorded increased digital transactions, with digital banking enrolments up by 187% and “send cash” transactions rising by 569%.

RCBC had 509 branches and 1,514 automated teller machines as of June.

The bank’s shares rose 2.12% or by 34 centavos to P16.34 apiece on Wednesday from the Tuesday’s finish of P16 each. — Beatrice M. Laforga