MANILA, Philippines — The Yuchengco-controlled Rizal Commercial Banking Corp. (RCBC), the seventh biggest in the country in terms of asset size, is allotting P5.2 billion this year to open new branches, improve banking operations and possibly acquire a new bank.

RCBC President and CEO Lorenzo Tan said the bank is actively scouting for banks to buy or acquire after raising almost P6 billion in Tier 1 capital last year.

Tan also confirmed that RCBC has already complied with the Bangko Sentral ng Pilipinas (BSP) directive to stay within the aggregate equity investment ceiling of 50 percent net worth of banks after exceeding this limit when the bank acquired Merchant Savings and Loan Association Inc. which later became RCBC Savings Bank.

“We have already complied with that (BSP’s) equity investment ceiling,” said Tan. “Last year we brought in two investors IFC (International Finance Corp.) and CVC Capital, and we brought in P5.8 billion of equity.” He added, “we brought in investors so that we could look at acquisitions and further growing our balance sheet. (Right now) we're looking around for banks to buy.”

Hong Kong-based CVC Capital Partners acquired 15 percent of RCBC and this raised the bank’s capital by P3.7 billion. The World Bank’s IFC, in the meantime, also invested P2.1 billion in the bank to support its lending growth particularly in SMEs, consumer finance and microfinance.

Tan said he expects 2012 to be slightly better than last year’s banking performance. He said sustaining profitability and to improve cost ratios is one of the major challenges. "(The) lowering cost-to-income ratio (is a challenge) so we invested in a core banking platform and we’ve been working on it in the last four years,” said Tan. “We expect to turn it on middle of this year so we're hoping that with new technology, we'll have a scalable, nimble system. (With this system) we can start lowering cost ratios and reduce people intervention.”

For this year, income-wise, he projects a growth of eight to 10 percent over 2011. As of the end of the third quarter, the bank earned P4.08 billion, up 11 percent year-on-year. Operating expenses totaled P9.10 billion as the bank continued to expand its branch and ATM network in order to increase reach and improve customer convenience. Cost to income ratio as of end-September stood at 55.63 percent. The full year income goal for 2011 is to reach P4.85 billion.

“We're focusing on a lot of actuarial consumer loans such as SME (small and medium enterprise), microfinance – these are the good sectors because their NPLs (non-performing loans) are lower and margins are higher,” Tan said.