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CITYSTATE Savings Bank has found the business of
pledging jewelry as loan collateral lucrative and became
so good at it other pawnshops began to notice.
In an
interview Tuesday, CityState Bank chairman and president
D. Alfred A. Cabangon said the product is so popular
with clients and its return so attractive they push for
it far more than they do with auto loans.
“We have
very low spreads on our auto loans we do not push for it
as actively as we do with our jewelry loan product,” he
said.
Clients
find the bank’s 1-percent all-in monthly charge very
attractive considering the average pawnshop charges at
least 7 percent a month.
The
1-percent charge is given only to preferential
customers, or those who already are customers of the
bank, but even walk-in clients are happy with their
2-percent charge, according to Cabangon.
He
acknowledged that the now-defunct Keppel Monte Bank
first thought of the product.
CityState improved on the idea so much, the Gokongweis
themselves, who own Robinson’s Savings Bank, were
inspired to go into the jewelry loan business.
“Now the
pawnshops are angry at us because we offer very
competitive rates,” Cabangon said.
Previously, he had to report net income of only P3.268
million in 2007, down 82 percent from P18.102 million a
year earlier.
Cabangon
said they used the money to underwrite the doubling of
the bank’s branch network, now totaling 24 from only 12.
He
expressed optimism net income this year would grow by at
least 30 percent, or to more or less P4.3 million.
“But
that is a very conservative number,” Cabangon said.
The
bank’s nonperforming loans (NPLs) average 2.15 percent
as of last April and compares with NPLs averaging 6.9
percent across all banks.
Its
acquired assets, more known as real and other properties
acquired or ROPOAs, averaged only 7.17 percent versus
industry average of 16.58 percent.
The
bank’s net interest margin at 7.15 percent also compares
with the industry’s three percent. |
