DAVAO CITY—Mindanao’s biggest rural bank has been going to remote areas where commercial banks did not dare to tread and continued to reap huge dividends in return, the bank’s chief executive said.

“We go to places where corporate farms and plantations operate and expand,” said Alex Buenaventura, president of the One Network Bank, which comprise three former separate rural banks and now was expected to grow to 25 branches across most of Mindanao.

Buenaventura said that in many places where they were and would expand, commercial banks and even thrift were never around to cater to even big rural-based depositors.

One Network Bank is present in the southern Zamboanga Peninsula, Central Mindanao and southeastern Mindanao, with a current net capital base of P903 million.

Most of the consistent growth was ascribed to the bank’s preference to microfinance in agriculture, approximating the system of money lenders and “compete with them in terms of speed and simplicity of the program.”

This was then in the 1980s when we would lend as small as P1,000 to P3,000 per borrower, said Buenaventura, “but now we can even afford to have multimillion-peso exposures in some industries”.

The bank has its biggest exposure, or lending, to the banana industry where small farmers and former plantation workers own small farm lots in Davao del Norte. It has already lent P450 million as of the end of 2006 to these farmers, whose aggregate areas reached 1,000 hectares.

He said the bank has already programmed an increase of lending this year where their total exposure would reach P600 million.

The One Network Bank has also extended loans to rice farmers spread in 600 hectares in the towns of Matan-ao and Bansalan in Davao del Sur. The bank lending was about P25,000 per hectare, or a total of about P15 million.

“We are now negotiating with farmers in pineapple and cassava production, and maybe later in the palm-oil plantations,” said Buenaventura, who started with the family-owned Rural Bank of Panabo and later merged with the Network Bank of the Consunji family. The One Network Bank later acquired the ProBank, which was put up and managed by the Catholic diocese of Kidapawan.

Buenaventura said the bank has aligned an allocation of P160,000 per hectare for pineapple farmers, whose aggregate farm size would reach 1,000 hectares. The bank has also set a similar target for total hectarage for cassava and allocating P18,000 loan for every hectare.

To ensure repayment though, the bank has set a standard of production level for borrowing farmers. In the banana sector, he said farmers should be able to maintain at least 5,000 boxes per harvest. For rice farmers, they should also produce not less than 110 cavans per hectare, for pineapple, not less than 90 metric tons, and for cassava, not less than five metric tons.

“The key issue here is productivity,” he said. The bank usually assigns a supervised credit technician to the borrower, or takes over the farm operation and management from a borrower when he fails to meet the minimum productive level “but only until such time that the borrower would be able to repay his loans.”

But Filipino farmers have proved that they were, indeed, productive, Buenaventura said, citing his long years of experience with farmer borrowers.

Of nearly 1,000 banana farmers that borrowed from One Network Bank, Buenaventura said only one farm was taken over eight months ago.  “The farm had to be rehabilitated.”

About 18 hectares of rice farmers were also taken over.

In expanding its presence in Mindanao, Buenaventura said, “We follow where the banana plantations are expanding or operating.”

“We would be also in remote towns where there are definite agricultural activities,” he said. In many cases, the bank would be able to get the big depositors based on the towns where the bank puts up a branch.

“In Maragusan [Davao del Norte] for instance, we were able to get the depositors which deposit huge sums in the next big urban center, like Tagum City”.

He said One Network Bank was already eligible for elevation of status to a thrift bank, “but we would rather stay as a rural bank to have that distinction of being the biggest rural bank.”

“In the next five years, we expect to increase our net capital to P7 billion, more than enough to be classified as a commercial bank,” he said.

Buenaventura said the bank would not also apply for that status “but we would be providing services of commercial banks.” He said they have already done that, such as putting up automated teller machines in their branches in rural areas and providing check clearing from the Philippine Clearing House.

“We believe Mindanao offers a lot of still untapped potential areas,” he said.

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DAVAO CITY—Mindanao’s biggest rural bank has been going to remote areas where commercial banks did not dare to tread and continued to reap huge dividends in return, the bank’s chief executive said.