RIZAL COMMERCIAL Banking Corp.’s (RCBC) booked a higher net income in the first quarter, mainly driven by an increase in its non-interest earnings.
The Yuchengco-led bank’s attributable net income surged by 69.92% to P3.638 billion in the first quarter from P2.141 billion in the comparable year-ago period, based on its quarterly report submitted to the local bourse on Thursday.
This translated to a return on average assets of 1.3% and a return on average equity of 13.3%, up from the end-2022 levels of 1.2% and 11.2%, respectively.
“We are reinforcing our sales network to enable wider and efficient coverage, guided by data science and analytics to further understand customer needs and serve them better,” RCBC President and Chief Executive Officer Eugene S. Acevedo said in a statement.
The lender’s net interest income declined by 9.7% to P7.267 billion from P8.052 billion a year prior as interest expenses surged to P7.401 billion from P2.22 billion, which more than offset the 42.77% increase in interest earnings to P14.668 billion.
Interest income on loans rose by 31.77% year on year to P10.702 billion, while earnings from investment securities climbed by 60.6% to P3.232 billion.
Net interest margin dropped to 3.2% from 4.1%.
Meanwhile, other operating income more than tripled to P5.726 billion from P1.85 billion.
This was driven by a surge in its miscellaneous income to P3.733 billion from P479 million, which RCBC said came mainly from gains from the sale of real estate properties.
Service fees and commissions increased by 26.6% to P1.4 billion amid higher income from credit cards, loans and deposits, and digital fees.
Foreign exchange gains also rose to P405 million in the first quarter from P24 million a year prior.
On the other hand, operating expenses grew by 22.3% to P7.194 billion from P5.884 billion amid higher taxes and regulatory fees.
This resulted in a cost-to-income ratio of 55.4% in the first quarter, down from 59.4% in the same period last year.
RCBC’s gross loans inched up by 2.6% year on year to P573.132 billion from P558.869 billion at end-2022.
“Accounting for 18% of asset growth for the period, the bank’s loan portfolio focused on higher yielding segments, such as SME (small and medium enterprises), higher by 18%, consumer loans, up by 14%, and credit card receivables, higher by 46%,” RCBC said.
The bank added that its net nonperforming loan ratio stood at 1.99% in the first quarter, “returning to pre-pandemic levels.”
On the funding side, deposits inched up by 0.25% to P859.396 billion as of March from the end-2022 level and rose 27% year on year amid a 17% rise in current and savings account or CASA deposits.
Its loans-to-deposits ratio went up to 66% from 63.4% at end-2022.
The bank’s total assets stood at P1.154 trillion as of end-March, up by 7.9% year on year.
Total equity increased by 6.8% to P116.372 billion in the first quarter from P108.926 billion in the comparable year-ago period.
Its common equity Tier 1 (CET1) ratio was at 11.3% as of March, down from 12.3% at end-2022. Its capital adequacy ratio also went down to 14.1% from 15.3% in the same reference period.
“With the upcoming P27.1-billion capital infusion from the Sumitomo Mitsui Banking Corp. (SMBC), the bank expects 300 to 400 basis points of uplift in CET1 ratios to further support its asset expansion,” RCBC said.
SMBC, the commercial banking arm of Sumitomo Mitsui Financial Group, acquired a 4.999% stake in RCBC in 2021.
“There are many opportunities for synergy and collaboration with SMBC, some of which we have been actively pursuing in the past few months,” Mr. Acevedo said.
“By adopting SMBC’s global best practices, we seek to redefine banking as a whole and raise the bar for customer experience,” he added.
As of March, the Yuchengco-led bank had a consolidated network of 462 branches and 1,371 automated teller machines nationwide.
RCBC’s shares closed at P23.6 each on Thursday, down by 30 centavos or by 1.26%. — K.B. Ta-asan