RCBC says clients prefer short-term investments

RIZAL COMMERCIAL Banking Corp. said its clients showed preference for short-term investments amid the uncertainties caused by the pandemic. — BW FILE PHOTO

RIZAL COMMERCIAL Banking Corp. (RCBC) has seen stronger demand for short-term investment instruments as the market remains cautious amid continued uncertainty due to the coronavirus pandemic.

The bank’s unit investment trust fund clients have been opting to go for products with less volatility, including money market and short-term funds, RCBC Trust and Investments Group Head Robert B. Ramos said in a statement.

The volume of the lender’s peso and dollar-denominated money market products jumped 51.6% to P9.4 billion as of October from its P6.2-billion level as of December 2019.

“It is very intuitive; investors don’t want to take added risks,” Mr. Ramos said.

The bank’s peso money market fund’s volume, meanwhile, more than doubled (155%) to P5.1 billion as of October from just P2 billion in December 2019. These investments, mostly in short-term securities such as government and corporate bonds, had an annual yield of 4.275% as of October.

Meanwhile, the volume of the bank’s dollar-denominated money market fund surged 118% to P703.9 million as of October from P321.5 million in December 2019.

“The shorter the investment term, the less the impact. When the market expects the interest rates to adjust against their position, they buy the shortest possible fixed-income asset to manage this price risk,” Mr. Ramos said.

RCBC President and Chief Executive Officer Eugene S. Acevedo last month said its customers whose incomes were affected by the pandemic have become more conservative.

The bank’s net earnings dropped 51.78% year on year to P892 million in the third quarter of 2020 on the back of higher loan loss provisions and waived client fees.

This brought the bank’s nine-month net profit down 11.31% to P4 billion.

The Yuchengco-led lender’s shares ended trading at P18.68 apiece on Monday, down by 1.06% or 20 centavos from its previous close. — LWTN