REALITY is still biting micro businesses in the country which are still experiencing limited access to capital.
But BDO Network Bank, the rural banking subsidiary of BDO Unibank and formerly known as One Network Bank, is steadily breaking that stigma as it fully recognizes that micro businesses, if supported accordingly, can turn into engines of economic growth.
Jesus Antonio Itchon, president of BDO Network Bank, said the rural bank serves a number of micro, small and medium enterprises (MSMEs) and individuals who own sari-sari stores, tailor shops, and carinderias, to name a few.
But there are still many who continue to borrow from informal lenders whose effective annual interest rates are too high and repayment is done on a daily basis.
“There is really no way for these people to build up capital under this set-up. At BDO Network Bank, the working capital loan structure has a tenor of 10 months up to three years and the repayment is monthly,” he said.
That is only step one of the process.
A key supplement is the financial literacy program that the bank does for its clients.
“It is imperative that they not only learn how to borrow but that we are able to build a complete banking relationship with them so that they also understand the value of saving and investing for the future. That’s what we instill in them,” said Itchon.
Clients of BDO Network Bank have too many stories to share and if they remain unaware of the importance of saving a portion of their earnings and allocating another slice to investing, the risk would be inevitable.
“All our clients have bank accounts with us, they have ATM cards and access to online banking too. This year, our objective is to familiarize them on risk management. There’s risks of fire, of flooding. The entrepreneur may be hospitalized. These risks may affect the financial status of their businesses. What we at BDO Network Bank want is to secure the financial safety of the owners so that their capital may grow,” explained Itchon.
In time, ONB’s aspiration is to take its clients’ businesses to the next level by supporting them with products and services that are relevant to their expansion.
BDO Network Bank’s campaign to drive inclusive economic growth likewise covers providing salary loans to public school teachers and government employees who are situated in less urbanized areas where they are unserved or underserved due to lack of or scarceness of banks.
According to Itchon, teachers’ borrowings are mainly used to provide for the education of their kids and siblings; medical coverage of their family members; and, home improvement. But one area is slowly joining the ranks and that is funding supplemental livelihood to augment household income.
In terms of expansion, BDO Network Bank is looking to put up more branches outside Mindanao, where its operations are now significant, to attain a meaningful nationwide presence.
BDO Network Bank has recently completed its rebrand following the approvals from the Securities and Exchange Commission and the Bangko Sentral ng Pilipinas.
Envisioned to continuously promote community banking, BDO Network Bank operates separately as a rural bank subsidiary that mainly services the countryside. Just like its parent bank, most BDO Network Bank branches are open on Saturdays.
Clients of BDO Network Bank also enjoy zero interbank charge when withdrawing from a BDO ATM.
BDO Network Bank is the largest rural bank in the Philippines in terms of assets, with a network of over 150 branches and 90 loan offices nationwide.
The bank provides a wide range of financial products and services including loans, deposits, cash management, remittances, and bills payment in areas considered unserved or underserved by banks.
Earlier, mother company BDO Unibank, Inc. (BDO) reported that its earnings for the first six months of the year reached P20.2 billion on strong recurring earnings from its core businesses, solid growth in fee income and normalization of trading & forex gains.
Net interest income increased by 24 percent to P56.9 billion as net interest margins (NIMs) improved to 3.99 percent from 3.50 percent last year.
Gross customer loans grew by seven percent to P2.0 trillion, as the bank continued to generate double-digit growth in the consumer and middle market segments.
Meanwhile, total deposits went up by three percent to P2.4 trillion, reflective of customers’ shift to higher-yielding fixed income investments, primarily bank-issued bonds. The bank’s CASA ratio, however, was maintained at 70 percent.
Operating expenses grew by 21 percent in line with the bank’s continuing expansion, with 53 domestic branches and offices opened in the first half of 2019, as well as higher volume-related expenses.
Total capital grew to P350.8 billion, with Capital Adequacy Ratio (CAR) and Common Equity Tier 1 Ratio at 14.2 percent and 12.6 percent, respectively, higher quarter-on-quarter and remaining comfortably above regulatory requirements.