PHILIPPINE Business Bank, Inc. (PBB) targets to double its income over the next four years as it looks to grow its consumer business to boost its margins while working towards its goal to upgrade to a universal bank.
“Looking to the future, we are seeing a bigger and more profitable bank… So, notwithstanding the continuous business improvements and initiatives towards growth, we see these [growth] accelerators contributing for us to be able to attain our target, which is to double our income levels within the next four years,” Joseph Jeeben R. Segui, PBB first vice-president and Corporate Planning and Investor Relations Group head, said in a presentation during the Philippine Stock Exchange’s Investor Day held virtually on Wednesday.
PBB booked a net profit of P475.42 million in the second quarter, down from P520.58 million a year ago. For the first semester, its net income increased to P1.07 billion from P1.03 billion.
Mr. Segui said the bank aims to boost its profits by growing its consumer lending business to make up about a third of its portfolio. At present, consumer loans make up just below 10% of its loan book, he said.
“This, we foresee, is a move that will bolster profitability through higher effective loan rates of consumer loan business compared to our core business, which is commercial lending,” he said. “As we’ve seen over the past few years, consumer loans… have really strong demand. And with this strong demand, it can propel both asset size growth as well as margins.”
PBB will select business lines that it believes it can be competitive in and are within its risk appetite, Mr. Segui said, including the teacher loans segment.
He noted that while the bank has taken a more “conservative” approach towards commercial loans due to the volatile operating environment, lending to small and medium enterprises will continue to be PBB’s core business even as it is now looking to diversify into high-margin market segments.
Mr. Segui added that PBB will also continue to explore potential acquisitions and partnerships but will remain “selective.”
“We’ll only pull the trigger if it is a compelling acquisition opportunity. In terms of strategic partnerships, we also continuously look into potential tie-ups or partnerships, and the major consideration being not just the additional funding that could be put into the bank, but, as important, we’d like a partner that can provide strategic value that will help the bank grow its business.”
Ideally, they want a partner that has the expertise, process, and technologies that can help PBB achieve its target to grow its consumer banking business, he said.
Lastly, the bank’s continuing work towards upgrading to a universal bank is also seen as a growth driver as it will allow PBB to tap new business lines, such as bancassurance, investment banking, and wealth management, to expand its customer base and boost its revenues and income, Mr. Segui said.
“We are working towards that, but we are being very deliberate. As our CEO always says, we don’t want to be a unibank just for the name. We want to be a unibank in essence, in terms of our service, in terms of the quality that we provide our clients, value, and in terms of our capabilities. So, we are continuously working on internal improvements to be able to be of that caliber and level to provide unibank-level services to our clients,” he said.
“We continue to be very intentional as we approach this milestone. So, we are headed in this direction, but we are not rushing it. But we are there, continuously working to be the unibank that we believe we have to be for our clients.”
PBB shares went down by 41 centavos or 4.72% to close at P8.28 each on Wednesday. — BVR
