Net loan expansion, receivables fuel ONB’s 93% net income growth

DAVAO CITY (MindaNews/15 September)– One Network Bank (ONB), Mindanao’s largest private rural banking network, posted a 93 percent net income growth in the first seven months of the year.

ONB, banking on the slogan “Pera ng Mindanao, Para sa Mindanao,” said the January to July net income record “has outperformed its own 2011 earnings performance.”

“The operating net income after tax of P336 million as of end July this year already surpassed the P315 million income [last year] and registered a record breaking growth of 93 percent compared to the P174 million in the same period last year,” the bank said in a recent statement.

“This net income level, if annualized, translates to a 41 percent return on average private equity and four percent return on average assets,” the ONB statement said.

This performance, the bank said, “indicates a powerful core performance for the leading provider of modern quality banking products and services in the countryside.”

Overall, ONB already exceeded the P2.4 billion minimum capital requisite for commercial banks as it raised its capital base to a robust P2.77 billion as of end July this year,” it said

“Despite the obvious capacity to convert to a commercial bank, ONB decided to retain its status as a frontrunner in the rural banking industry,” the bank said.

The bank attributed the upsurge in net income mainly to the substantial expansion in net loans and receivables, an increase of around 17 percent or P1.83 billion since the onset of 2012.  Half of the net loan expansion and receivables were recorded in the month of July, with a loan portfolio growth of P5 billion, or 70 percent higher compared to July 2011.

ONB earned P775 million in net interest income as of July this year, a number that accounted for 61 percent of the total operating income. It also generated P361 million in “fee-based income principally derived from service fees on loans.” This amount contributed to another 28 percent to the total operating income.

What is to the disinterest of commercial banks in attracting household income the ONB “has harvested in leaps and bounds” to increase its deposit base to 575,000, and allowing it to continue its policy to reinvest profits.

“This loan expansion was made possible essentially by an increase in both deposits of 40 percent or P14 billion, from P10 billion level in July last year,” ONB said. This increase in deposit base also pushed its capitalization “due to the ONB’s policy of reinvesting all profits”.

As of end July this year, the bank’s increased pool of depositors also helped grew its total resources to P17 billion, or a 37 percent increment from last year’s figure of P12.5 billion.

It said that its “strong deposit and loans growth is backed up by the bank’s intensive branch expansion.”

Earlier this year, ONB opened its 83rd branch in Pasong Tamo Extension, Makati City “as a response to the need of Mindanao clients for a financial highway to the country’s central business district.” ONB Makati Branch is the bank’s first branch outside Mindanao and the first branch to open this year. Other new branches that followed were inaugurated in Butuan City, Balingasag in Misamis Oriental, and Sangali in Zamboanga City.

“Sustained growth is foreseen in the light of the recent approval from the Bangko Sentral ng Pilipinas for five more branches in loilo. These branches will complement the existing six offices of the Rural Bank of San Enrique in Iloilo soon to be absorbed by ONB once the merger secures approval of banking authorities,” it said.

The bank, with 1,291 employees, has 86 branches and 125 PeraAgad ATMs in Mindanao. (MC/MindaNews)