Rizal Commercial Banking Corp. (RCBC) has expressed optimism on a 30-percent loan book growth this year on the back of its investments in infrastructure projects such as the public-private partnership (PPP) program.
In a recent press briefing, John Thomas Deveras, RCBC executive vice president and head of Strategic Initiatives, said that for this year, the bank is focusing to grow its loan portfolio, which has been at an average 12 percent for the past five years.
“Now that we already invested in infrastructures, we have a new core banking system, we’ve hired a lot of lending officers in the SME [small and medium enterprises]book and the consumer finance book, and the RCBC Savings, we were in a position to grow our loan book from an average of 12 percent to 15 percent in the fast five years to 30 percent this year,” he explained.
However, the RCBC executive noted that the big risk for the growth of RCBC’s loan portfolio is the growth in its corporate loan book, which can easily be affected depending on the development in the PPP program.
“If significant number of PPP projects will be awarded in 2014, then we are very confident that we can hit this 30-percent loan book growth target. If the PPP projects are delayed again, then may be a more realistic target may be 20 percent,” he said.
Deveras explained that based on RCBC’s loan book at end-2013, its corporate book accounted for 65 percent, 25 percent is consumer book, and the remaining 10 percent is for the SME loan book. Of the 25 percent in its consumer book, 4 percent are credit cards and 21 percent is divided equally between automotive loans and mortgages.
“The target growth rates for SME and consumer is 40 percent, corporate is 24 percent. So assuming those things happen by the end of 2014, the [loan]mix will change, 60 percent corporate, 28 percent consumer and 12 percent SME,” he said.
For the long term, the RCBC executive said that the bank plans to change the mix of its loan book from predominantly corporate loan book to a balanced corporate lending and consumer finance lending.
“Why are we doing that? In corporate lending, our margins are very thin. In SME lending, credit cards, consumer, the margins are still pretty generous. So we like to focus on that segment of the banking industry,” he said.
Deveras added that RCBC’s long-term loan mix plan is to bring down corporate lending to just 40 percent of the book, and increase consumer and credit cards to another 40 percent, while SME lending is targeted to increase by 20 percent.
On the other hand, the Deveras also said that RCBC is one of the leaders in the country when it comes to SME lending, since it has the key factors such as presence in the provinces, robust credit scoring system, and loan officers that deployed in the provinces.
“RCBC is the only big bank which 60 percent of its branches are outside Metro Manila. We are in the best geographic position to tap the SME market,” he added.