MICROCAPITAL STORY: Rizal Commercial Banking Corporation (RCBC) of the Philippines to Expand Microfinance Operations

The Rizal Commercial Banking Corporation (RCBC) has announced that it will continue to further develop its microfinance operations through additional acquisitions of rural banks. It is looking to buy rural banks in the northern Luzon and Visayas regions of the Philippines. RCBC president and chief executive Mr Lorenzo Tan said that “we’re looking to expand microfinance and we started this month. It can contribute five to ten percent to our bottom line in five years”.

RCBC currently serves 1.8 million clients with 330 branches. The aim is to reach 400 branches as soon as practicable through the acquisition of a small commercial bank or medium-sized thrift (savings) bank. The Bangko Sentral ng Pilipinas (BSP), the central bank of the Republic of the Philippines, has ordered that no further branches be opened in Manila so RCBC must acquire banks if it wishes to expand. By 2012 the RCBC’s strategic goal is to own 500 branches throughout the Philippines. In March 2009 MicroCapital reported on the 99 percent acquisition of JP Laurel Rural Bank through a shareholder advance facility to establish RCBC’s microfinance business. JP Laurel Rural Bank had 10 branches in southern areas of the Philippines.

According to BSP data as of 30 June 2008 there were nine microfinance-oriented rural and thrift banks in the Philippines with a microfinance loan portfolio of PHP 703.56 million (USD 14.6 million) and 148,789 borrowers. There were also 221 regular banks with microfinance operations which represented a microfinance loan portfolio of PHP 5.76 billion (USD 119.9 million) with 653,303 microfinance borrowers.

The RCBC was founded in 1960 as a small development bank. At the end of 2007 it had total consolidated assets of PHP 239.1 billion (USD 4.98 billion). RCBC had a return on assets of 1.4 percent; return on equity of 12.4 percent and loans totaling PHP 105.8 billion (USD 2.2 billion) for the same period. The RCBC expects net income to grow from PHP 2.15 billion (USD 44.6 million) to PHP 2.3 billion (USD 47.9 million) in 2009, an increase of 10 to 15 percent. As the RCBC does not report to the MIX Market, the microfinance information clearinghouse, all financial information was located on its website.

By Sally Levy, Research Assistant

Additional Resources:

Manila Standard Today: RCBC expects 15% hike in ’09 net income to P2.3b

Philstar.com: RCBC eyes smaller bank to boost nationwide network

TradingMarkets.com: Philippine Bank RCBC on look-out for small, medium-sized banks

Rizal Commercial Banking Corporation: Home

MicroCapital Story: Rizal Commercial Banking Corporation (RCBC) of the Philippines to Pay USD 7.8 million for a 99% Share of JP Laurel Rural Bank

Bangko Sentral ng Pilipinas (BSP): 2008 Year End Report on BSP Initiatives for Microfinance and Financial Inclusion