Bank execs bullish on biz growth as economy recovers

By Joann Villanueva

March 1, 2022, 5:21 pm

<p>RCBC senior vice president Ma. Christina Alvarez</p>

RCBC senior vice president Ma. Christina Alvarez

MANILA – The continued recovery of the domestic economy makes executives of Rizal Commercial Banking Corporation (RCBC) optimistic of a similar outcome for the bank. 
The bank’s net income grew by 41 percent year-on-year last year to PHP7.1 billion, driven by the 13-percent rise of both the revenues and loans and 26-percent increase in deposits. 
In a virtual briefing on Tuesday, RCBC senior vice president Ma. Christina Alvarez said 2021 is a good year for the bank because of strong growth in their core business and they are committed to continue with this performance. 
“The momentum is there. Really, the outlook is to have the same trajectory for core business… We see GDP (gross domestic product) growth at 6 percent at the least and we’re going to participate in that growth. So, again, the momentum of 2021 is continuing in 2022,” she said. 
RCBC’s capital expanded by 10 percent to PHP111 billion last year and capital adequacy ratio (CAR), which is a gauge of a bank’s financial health, stood at 15.2 percent, higher than regulatory requirements. 
Alvarez said they forecast growth in asset base this year to be around mid-teens from around 24.2 percent last year. 
“It will be tempered this year but we still see strong growth. So, there will be pockets of opportunities across the board,” she said. 
RCBC chief economist Michael Ricafort said they forecast growth in the first quarter this year to be around 6.5 to 7 percent while full year growth is projected to be around 6 to 6.5 percent, with an opportunity for higher expansion depending on the continued reopening of the domestic economy and the impact of the geopolitical developments overseas, among others. 
Ricafort said the ongoing Ukraine-Russia conflict will have an inflationary impact of domestic inflation through higher commodity prices. 
Other growth drivers for the domestic economy this year include spending related to the May 2022 national polls, recovery of the tourism sector, which was greatly impacted by the travel ban imposed during the pandemic; and further increase in the rate of inoculation against the coronavirus disease 2019 (Covid-19).
“So we won’t be surprised to see a growth of 7 percent in the first quarter and possibly also for the rest of the year,” he added.
Meanwhile, concerns are high regarding the impact of the ongoing conflict between Ukraine and Russia but RCBC treasury group head Ricky Cebrero is optimistic the domestic banking industry can weather this because of its strength.
He said some foreign banks that have exposures to Russia are now grappling with the impact of 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 regarding global monetary transactions.
Cebrero said the geopolitical conflict’s impact on the Philippines will primarily be through the rise in global oil prices and its effect on domestic inflation. 
He said the inflationary pressures will have effects on banks’ lending activities in the short term “because at the end of day, if you believe that this will be temporary, then, I guess interest rates will increase at the short end curve but not on the long-end curve to address inflation.” 
“We are at the very, very strong position. When I say we (what it means), the banking industry, is in a very strong position to absorb what is developing in the international markets,” he added. 
Cebrero said regulators have prepared the domestic banking industry to have, among others, higher capital ratios to make it more resilient from any negative developments overseas.
“I think we can say probably we can clearly see the capital ratios of the banks. We are at a very strong position whatever happens in the international market in the banking industry,” he added. (PNA)