DAVAO CITY­—Increased loans among public-school teachers and business owners pushed the net capital of One Network Bank (ONB) to P2.5 billion, higher than the operating capital required of commercial banks.

But just like in the past when ONB declined to graduate into a thrift bank when it also surpassed the capital requirement on commercial banks, Alex B. Buenaventura, ONB president, said the bank would retain its status as a rural bank to continue providing affordable and modern banking services and to allow farmers and small entrepreneurs in the countryside to access the banking system.

Most of its depositors also bulked up its intermediation ratio to nearly 1:1, further attesting to the attraction of rural banking among the previously unbanked sectors of society, Buenaventura said.

ONB posted a net comprehensive income of P428 million last year, another record 38-percent increase over its previous year performance of P311 million.

“With this record income, the widest and most modern rural bank’s net worth or net capital reached P2.5 billion, now exceeding the P2.4-billion minimum capital required of commercial banks,” Buenaventura said.

The increase in its loan portfolio contributed to the surge in its net income. The ONB posted a 72-percent increase, from P6 billion in 2010 to P10.4 billion by the end of last year, with the biggest portfolio increase coming from Mindanao government teachers.

The Department of Education has an existing agreement with ONB to enroll its teachers in the loan program called DepEd Automatic Payroll Deduction System (DepEd-APDS) Salary Loan Program.

As of end-2011, ONB’s exposure to 48,467 DepEd teachers reached P5.9 billion “for a whopping 109-percent increase over year 2010,” the ONB statement said.

Business loans extended to small and medium enterprises (SMEs) contributed the next higher account, which increased the portfolio volume by 78 percent, from only P800 million to the P1.4 billion by end-2011.

“This upsurge in lending increased ONB’s loan intermediation ratio to almost 1:1 [P10.4 billion loans: P10.5 billion deposits],” the statement added.

Despite the elevated status in terms of financial income, Buenaventura said the ONB would not convert to a commercial bank “principally because of the lower 3-percent legal reserves required by the BSP [Bangko Sentral ng Pilipinas] from RBs [rural banks] as against the 20-percent legal reserves for [commercial banks].”

On its deposit liabilities reaching P10.5 billion, the ONB said this represented an increase of 11 percent from the 2010 level of P9.4 billion.

He said the lower cost current account and savings account (CA/SA) contributed 64 percent in total deposits, a significant part of which came from the 360,000 PeraAgad Pinoy ATM cardholders. ONB traces the popularity of this account to the lower opening deposit and maintaining balance of only P100.

“This makes this convenient and affordable product very popular among the small accounts especially in countryside areas all over Mindanao where ONB is in most cases the only provider of ATM machines,” the bank’s statement said.

The ONB now has total resources of P15.7 billion, also a big 33-percent increase over the P 11.8-billion level in 2010.   

“Our capital adequacy ratio remains very healthy at 20 percent, with the NPL [nonperforming loan] ratio at 5 percent and the NPA [nonperforming asset] ratio at four percent as of end-2011,” the bank statement said.

Buenaventura said ONB is the widest private banking network in Mindanao with 82 branches. It is also the most modern rural bank with a fleet of 114 PeraAgad ATMs and with the introduction of the new Internet banking service now undergoing pilot testing.