Bank of Makati eyes steady profit growth
BANK OF MAKATI (A Savings Bank), Inc. looks to sustain its profit growth this year as it aims to channel funds to be freed up by the upcoming cut in reserve requirement ratios (RRR) to ramp up its lending, its top official said.
Bank of Makati President Luis M. Chua said their net income grew by about 20% year on year in 2024, meeting their target, even as they fell behind some of their loan segment goals.
“We would not disclose right now our exact target, but definitely it should be more than what we are getting in the previous years,” Mr. Chua told BusinessWorld on the sidelines of an event this month when asked about their profit outlook for this year.
Based on its balance sheet posted on its website, the bank’s return on equity was at 19.8% at end-2024, down from 19.14% at end-September 2024.
Return on assets rose to 8.11% from 7.82% in the same periods, while net interest margin declined to 19.73% from 22.1%.
The official said the bank aims to use the liquidity to be released via the Bangko Sentral ng Pilipinas’ (BSP) RRR cut to fund its loans.
“Thrift banks would always go for consumer loans… because they’re the most profitable,” Mr. Chua said.
The BSP will bring down the RRR of thrift lenders by 100 basis points (bps) to 0% effective March 28. The reserve ratio for universal and commercial banks and nonbank financial institutions with quasi-banking functions will also be cut by 200 bps to 5%, while that for digital banks will be slashed by 150 bps to 2.5%.
Rural and cooperative banks’ RRR has been at 0% since October, the last time the BSP cut reserve requirements.
The RRR is the portion of reserves that banks must hold onto to ensure they can meet liabilities in case of sudden withdrawals. Lower ratios mean they have more funds to lend to borrowers.
“We are optimistic about housing loans. Although I think some of the banks have already slowed down, but we are still optimistic about housing loans. Also, simply because our portfolio is still small,” Mr. Chua said.
“But for other consumer loans, particularly, we will be still strong with motorcycle loans as we have been leading in that particular area. All the rest will be typical loans,” he added.
About 70-80% of Bank of Makati’s loan portfolio is made up of motorcycle loans.
The thrift bank is also targeting to launch a digital banking app by mid-year to expand its reach, Mr. Chua said.
Bank of Makati’s gross loan portfolio grew to P39.81 billion at end-2024 from P36.57 billion at end-September, according to its balance sheet.
Its gross nonperforming loan (NPL) ratio improved to 13.77% at end-2024 from 14.89% at end-September. Its gross NPL coverage ratio, meanwhile, went down to 46.34% from 51.37%.
Bank of Makati had assets worth P53.38 billion at end-2024. — A.M.C. Sy
