Thursday, 28 September 2023

Landbank yields $371M profit, exceeds H1 target by 19%

5 min read

The Land Bank of the Philippines (Landbank) raked in a net income of PHP 20.9 billion ($371 million) in the first six months of the year, exceeding its first-half target by 19% or PHP 3.3 billion ($58 million).

The six-month income translates to 2.7% year-on-year growth from PHP 20.3 billion ( $361 million) and represents almost 60% of the bank’s PHP 35 billion ($622 million) full-year target.

Lynette V. Ortiz, president and CEO of Landbank, said: “We are very much on track in meeting our financial targets for the year, as income from loans and investments continue to expand. Landbank is in prime position to sustain our intensified support to the agriculture sector and other key industries.”

The bank’s net income growth in the first semester is attributed to earnings from loans and investments, which increased by 49.8% and 43.5%, respectively.

Landbank also solidified its industry footing with total assets reaching PHP 3 trillion ($53 billion) or 7.9% higher than PHP 2.8 trillion ($49 billion) in the same period a year ago.

The increase in assets was driven by deposits amounting to PHP 2.7 trillion ($48 billion), which expanded by 9.2% year-on-year.

The bank likewise booked double-digit growth in capital at 14.4% to PHP 236.3 billion ($4 billion) from PHP 206.5 billion ($3.6 billion).

Landbank’s return on equity remains at a healthy level of 13.82%.

Landbank consistently ranks among the top universal banks in the country in terms of assets, deposits, loans, and capital. Global credit ratings agency Fitch Ratings, Inc. recently upgraded the bank’s outlook to “stable” and affirmed its Long-Term Issuer Default Ratings (IDRs) at 'BBB'.

Landbank celebrated its 60th anniversary on 08 August 2023, representing six decades of uplifting lives, empowering communities, and serving the nation — all in pursuit of an inclusive and sustainable economy.

LBP, DBP merger seen to entail substantial government savings

President Ferdinand R. Marcos Jr. has been pushing for the merger of Landbank and the Development Bank of the Philippines (DBP), which is in line with the administration’s thrust toward financial efficiency among state-owned banks.

Benjamin Diokno, secretary of the Department of Finance said: “The President expressed the desire to merge the two to make it the biggest bank in the country because of the recent financial developments abroad. And that’s really the best practice, the biggest bank usually is owned by the state globally”.

“He expressed concern that in the process of merging, none of the services provided by either bank will be lost and we assured him that with the merger—because both the Landbank and DBP are universal banks, they do almost the same, except that one is focused on agri, the other one on industrial projects,” Diokno said.

There will be savings as a result of the planned merger and the merged bank will be stronger, he said, adding that the likely outcome will be a lower interest rate.

The projected operating cost savings due to the planned merger, Diokno said, could reach at least PHP 5.3 billion ($94 million) each year or at least PHP20 billion ($355 million) in the next four years.

He added that these figures are understated because they do not include revenues that can be derived from the sale of redundant DBP assets and various properties such as its Makati head office, BGC property, various branch properties, equipment and licences, and income that can be derived from the proceeds of such sale.

In terms of the number of branches, Landbank has 752 branches while the DBP has 147 branches based on recent mapping, Diokno said, noting only 22 DBP branches will be retained.

Part of the government plan is to put up Landbank branches in all local government units (LGUs) throughout the Philippines, which could be a combination of light branches or big branches and automated teller machines (ATMs).

“Its advantage is that we will be able to save a lot of money for the national government,” Diokno added.

Although Diokno admitted there would be job losses because of redundancy and reduction in the number of branches if the merger is finally approved, he said employees could opt to retire under the government pension system or accept a liberal package to be offered by the government.

Re-disseminated by The Asian Banker

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