NextGen Day

MANILA, Philippines — Executives of Rizal Commercial Banking Corporation (RCBC) are optimistic about a similar outcome for the bank as the domestic economy continues to improve.

Last year, the bank’s net income increased by 41% year over year to PHP7.1 billion, owing to a 13% increase in revenues and loans, as well as a 26% increase in deposits.

RCBC senior vice president Ma. Christina Alvarez stated in a virtual briefing on Tuesday that 2021 is a good year for the bank because of excellent growth in their core business, and they are determined to maintain that performance.

“There’s a lot of momentum.” In reality, the core business is expected to follow the same path… We anticipate GDP (gross domestic product) growth of at least 6%, and we intend to participate in that increase. “As a result, the momentum of 2021 will continue in 2022,” she explained.

Last year, RCBC’s capital increased by 10% to PHP111 billion, and its capital adequacy ratio (CAR), a measure of a bank’s financial soundness, was 15.2 percent, exceeding regulatory requirements.

Alvarez expects asset base growth to be in the mid-teens this year, down from roughly 24.2 percent last year.

“This year will be tempered, but we still expect substantial growth.” As a result, there will be areas of opportunity all over,” she explained.

According to RCBC Chief Economist Michael Ricafort, growth in the first quarter of this year is expected to be around 6.5 to 7%, with the possibility of higher expansion depending on the continued reopening of the domestic economy and the impact of geopolitical developments overseas, among other factors.

According to Ricafort, the protracted conflict between Ukraine and Russia will have an inflationary influence on domestic inflation due to increasing commodity prices.

Other growth drivers for the domestic economy this year include spending for the national elections in May 2022, the revival of the tourism sector, which was severely harmed by the travel ban enforced during the epidemic, and an increase in the rate of coronavirus disease vaccination in 2019. (Covid-19).

“So we shouldn’t be astonished if we see a 7% increase in the first quarter and potentially the rest of the year,” he continued.

Meanwhile, fears about the impact of the current crisis between Ukraine and Russia are widespread, but RCBC Treasury Group Head Ricky Cebrero is certain that the domestic banking system will be able to weather the storm due to its resilience.

Some foreign banks with Russian exposure are now dealing with the fallout from the removal of some Russian financial institutions from the Society for Worldwide Interbank Financial Transactions (SWIFT), a secure platform that allows members to exchange information about global monetary transactions, according to him.

The impact of the geopolitical battle on the Philippines, according to Cebrero, will be principally through the rise in global oil prices and their impact on domestic inflation.

Inflationary pressures, he added, will have a short-term impact on bank lending activities “because, at the end of the day, if you feel this will be temporary, then I guess interest rates will rise at the short end of the curve but not at the long end of the curve to address inflation.”

“We are in a really strong position.” He went on to explain, “When I say we (what it implies), the financial industry is in a very strong position to absorb what is going on in the foreign markets.”

Regulators, according to Cebrero, have prepared the local banking industry to have stronger capital ratios, among other things, to make it more resilient to any negative developments elsewhere.

“I believe we can safely state that we can see the banks’ capital ratios.” Whatever happens in the international banking sector, we are in a very solid position,” he continued.

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