Rizal Commercial Banking Corp., the country’s ninth largest lender, said Tuesday it will issue P10 billion worth of long-term negotiable certificates of deposit to support growth.
RCBC said in a disclosure to the stock exchange the bank’s board of directors had approved the planned issuance of Philippine peso-denominated LTNCDs on July 27.
The issuance would be subject to prevailing market conditions and approval of Bangko Sentral ng Pilipinas, it said.
“The bank plans to issue LTNCDs to lengthen the duration of our liabilities to support asset growth,” RCBC president and chief executive Lorenzo Tan told The Standard in a text message.
“The board approval was to issue up to P10 billion. LTNCDs usually have a tenor of 5.5 years,” Tan said.
LTNCDs are negotiable certificates of deposit with a designated maturity and represent a bank’s obligation to pay the face value upon maturity, with periodic coupon or interest payments during the life of the deposit. The instruments have longer maturity and carry higher yields.
LTNCDs are covered by deposit insurance with Philippine Deposit Insurance Corp. of up to P500,000 per depositor.
RCBC posted a 25.29-percent increase in net income to P2.53 billion in the first half from P2.02 billion a year ago.
This translated into an annualized return on equity and return on assets of 9.3 percent and 1.1 percent, respectively.
Net interest income reached P7.45 billion and represented 63 percent of gross income which increased by 12.4 percent to P11.8 billion. The bank achieved an annualized net interest margin of 4.2 percent, which remained one of the highest in the sector.
Tan said earlier RCBC was advancing on all fronts, from core lending to deposits to fee-based income.
Core lending business was also sustained with loan book excluding interbank loans expanding by 18 percent to P275.7 billion. All market segments sustained their growth with average loan volumes of corporate, consumer, and SME increasing by 20 percent, 18 percent, and 30 percent, respectively.
Loans for small and medium enterprises comprised 12 percent of the bank’s total loan portfolio as planned.
Meanwhile, microfinance lending through Rizal Microbank continued its consistent climb with outstanding loan portfolio increasing by 46 percent. Interest income from the lending business contributed 83 percent of the total interest income of the bank.
Despite the sustained growth momentum in loans, asset quality remained well-managed with the parent bank’s non-performing loan ratio at 0.24 percent while NPL cover stood at 159.13 percent.
Other operating income went up by 50.21 percent to P4.30 billion with securities trading gains contributing P1.72 billion.
Total fee-based and miscellaneous income increased 23.23 percent to P2.53 billion.
Improved contributions came from investment banking-related income which increased by 198 percent, bancassurance which went up by 148 percent, and fees from loan-related transactions which increased by 37 percent.
Total operating expenses also grew 9 percent year-on-year to reach P7.4 billion.
Total deposits stood at P321.9 billion with low-cost CASA (current and savings account) deposit level growing by P16.6 billion to P204.3 billion and leading to a CASA ratio of 63 percent.
Total consolidated assets grew by 9 percent to P468.7 billion while capital funds improved by P16.9 billion to P62.4 billion.
The bank’s distribution network grew to 450 branches in the first half from 439 a year ago, while ATMs increased to 1,208 compared to 1,163 in the same period last year.