Gilda Pico, Land Bank president, said this compared with first-half earnings totaling only P5.52 billion in the first half which puts the bank on track towards hitting or even exceeding its full-year target of only P8.5 billion.
“We will definitely exceed our full-year target,” Pico said, noting the bank historically generated a substantially larger income on the second half of the year.
Pico attributed the increase to greater investments and higher conduit-lending activities of participating banks whose retail lending to farmers and fisher folk have risen substantially in recent months as a consequence of a number of credit “enhancements.”
Chief among these, Pico said, was the establishment of credit-surety funds or CSFs that now make it possible for a greater number of borrowers to approach rural and cooperative banks around the country for loans without exposing the lenders to higher-credit risks.
“The establishment of CSFs and other credit enhancements have certainly made possible for many more borrowers to obtain bank loans. The banks, in turn, need not fear the risk [of default] as the CSFs take care of that,” Pico said.
In a CSF, funds from non-governmental organizations, local government units and private entities are placed in a pool that acts as security for borrowers who may not be able to qualify for a loan without it. The CSF guarantees the security of loans and many banks in 15 provinces and cities around the country have set them up already, helping generate more loans in the process.
The CSF mechanism, first set up with the guidance of the Bangko Sentral ng Pilipinas in Cavity City in 2008, helped generate loans totaling more than P80 million last year but anticipated to hit P200 million this year as participating banks get to process loan applications faster.
Pico reported a 19-percent increase in total loan portfolio to P245 billion at end-July and released close to P17 billion worth of loans in the first seven months versus year ago loan releases of only P12.5 billion.
Because Land Bank has more lending conduits now than they had before, the bank posted return on equity, an indicator of efficiency in generating profits given its capital base, averaging 17.7 percent as of July this year or above-industry ROE averaging only 12 percent based on end-March data.
Land Bank has set aside P37 billion of its portfolio for agri-related loans this year and another P22 billion for micro-, small- and medium- enterprise loans.
It has released palay loans worth P5.9 billion thus far or 15 percent more than year-ago palay loans of only P5.1 billion.
Pico also said Land Bank now has remittance units in 34 countries around the world, the latest having been forged with state-owned Poste Italiane which has 14,000 branches all over the European Union member-country.
The tie-up with the Italian postal unit makes more certain that LandBank’s remittance goal of at least $770 million this year will be hit, LandBank president Gilda Pico said.
Already, Pico said LandBank facilitated the remittance of $355 million worth of earnings by Filipinos in Italy and other transactions as of end-June and likely surpass last year’s remittances totaling only $683 million.
Pico plans on holding their own against competing remittance units both in Italy and the Philippines this year, the bank having set out simply to maintain its share of the $20-billion Filipino remittance market.
With the tie-up now in place, executives anticipate the migration of loyal clients in Milan and Rome where LandBank has remittance offices to patronize the same service in any of Poste Italiane’s 14,000 branches.
(Jun Vallecera)
