Rizal Commercial Banking (RCB) Q2 2024 earnings summary

Executive summary

• Net interest income rose 29% year-over-year in 1H 2024, driven by a 12% increase in earning assets and 13% loan growth, especially in consumer loans.

• Fee income increased 24% year-over-year, with credit card fees up 53% and digital transaction volume up 29%.

• Net income declined 28.5% year-over-year to PHP 4.45B, despite higher revenues, due to increased operating expenses, impairment losses, and lower trading gains.

• Asset quality remained stable overall, with a gross NPL ratio of 3.77%, though some pressure was noted as NPL ratio increased to 2.0% from 1.6% at year-end 2023.

• Digital banking continued to expand, with 38% of unsecured loans availed digitally and multiple awards for digital excellence.

Financial highlights

• Gross income reached PHP 25.0B, up 6.6% year-over-year; net interest income at PHP 19.7B, up 28.6%.

• Fee income totaled PHP 3.94B, up 24.1% year-over-year.

• Operating expenses rose 7.4% to PHP 15.4B, mainly from higher employee benefits and IT costs; impairment losses increased 4.4% to PHP 3.6B.

• Total assets grew 7.4% to PHP 1.26T; loans increased 13.5% to PHP 654.5B; deposits up 6.7% to PHP 959.9B.

• Capital rose 28.5% to PHP 152.1B.

Outlook and guidance

• Philippine GDP growth for 2024 is forecast between 5.8% and 6.1% by major institutions; government targets 6.0%-7.0%.

• Inflation as of July 2024 reached 4.4%, the highest in nine months, mainly due to food and utility prices.

• Policy rate cuts are less likely in the near term, with possible reductions of 0.25-0.50% for the rest of 2024.

• Management does not anticipate losses from outstanding commitments and contingencies that would adversely affect operations.

• No known trends or uncertainties expected to materially impact income from continuing operations.