It is common in every aspect of human activity and development that performance is measured according to a set parameters or quantifiable indicators to determine, track, and project the results against previous or future periods. Particularly so in economic and financial affairs where a standardized and well-defined metrics are used to measure and analyze the well-being of an economy or a company over the conclusion of a definitive term or timeline. Among banks, an end-of-year reckoning regularly done as a periodic and comparative activity to determine progression.

New Rural Bank of San Leonardo (Nueva Ecija), Inc.
Financial Summary / Financial Highlights
As of 31 December 2023 and 31 December 2022

   The best thing that happened in NRBSL’s 2023 financial performance is the rebound in profitability from P10.41 million in the previous year to P18.18 million. The impact of improved pricing of financial products and loan collection campaign is evident with P18.92 million more net interest income earned compared to year-ago. This was complemented by a P5.52 million increase in non-interest income as a result of diversification in the income streams of the Bank which also includes convenience fees from co-branding digital payment platforms. The combined augmentation of P24.45 million in income generation more than covers the P11.16 million increase in non-interest expense. In the main, the additional cost of personnel compensation and benefits is behind this rise. Conscious of the persistent food inflation, NRBSL’s leadership allocates funds for salary adjustments to help its people absorb the effects of higher price on household commodities. With sound financial management, the Bank is able to close the period with a positive variance of over P13.28 million in pre-provision profits.

   The high regard and importance NRBSL put on delinquency management is demonstrated in the bigger provision for probable losses of P26.08 million the Bank allocated in 2023. The amount of provisioning which is higher by almost P5.00 million against the previous year reflects the prudence the Bank observes in its lending operations by providing appropriate financial protection. The measure is timely as the performance of Philippine Banks in general in the area of non-performing loans (NPL) has become a common concern in the industry.

   Another measure that helped stabilize NRBSL’s profitability in 2023 is its improved liquidity management where the appropriate level of cash reserves is regularly set relative to its current financial obligations and portfolio growth trajectory. Accordingly, the Bank has started to introduce operational adjustments in line with a more active and flexible approach to liquidity management through need-based funding operations. This involves the use of idle funds to retire borrowed funds which will result to reduction in interest expense and to invest in low-risk instruments or deposit placements in order to generate revenues.

   For the first time in many years, NRBSL’s Bills Payables with its major funding partners LBP and DBP have reached a record low. The financial benefit of this move is best assessed in the light of the increase in the cost of borrowed funds which reached over 7%. This significant upward adjustments in the pricing of these credit facilities would have caused NRBSL’s interest expense to bloat without these measures. The stable liquidity condition was also enhanced by infusion of fresh funds from the proceeds of substantial asset sale.

   The marketing activities of the Bank in 2023 may not be as aggressive in loans generation but was never inactive. It was not eyeing the Bank’s credit portfolio to grow at the onset but in due time a campaign was organized to replenish closed accounts and increase credit exposures to loan clients with good track record. At the end of the year some P62.19 million was added to the credit portfolio which proves the organization’s capacity to deliver as long as the members are properly guided by a campaign.

   The Bank’s deposit portfolio had a modest increase but its significance could not be undermined as the level of total deposits crossed the P1.0 billion milestone. The launch of Deposit Marketing Concepts and Campaign involving the Community Banking arm of the Branches and Banking Technology Group is meant to push this momentum. The Bank started working to re-launch its current account facility and the promotion of small-size deposits from targeted digital platform-users. The campaign is anchored on several projects aside from the re-introduction of the underperforming checking account facility, promotion of deposit products among borrowers, and expansion of daily solicitation among others. These measures are seen as the drivers to mobilize new deposits in the succeeding period.

   The Bank’s profitability which received a big push with substantial gains from proceeds of high-value acquired asset sold as a result of conservative approach of the Bank in loan securitization by getting more-than-adequate collateral cover again paid-off. This windfall in profit generation which was sustained by accelerating collection activities and matched by prudent expense management have considerably improved the Bank’s earnings. This scenario caused the Bank’s performance measured by Return-on-Equity and Return-on-Assets to recover as well at 7.02% and 1.18%, respectively, which were almost twice as much than previous year’s ratios. With improved profitability and conscious effort of the Credit Guarantees under the Credit Department to increase guarantee enrolment, NRBSL’s Capital Adequacy Ratio should has approximated the level 20% for three consecutive quarters.

   Ever since NRBSL aims at ensuring its stakeholders return on their equity investments. In 2023, NRBSL paid P2.31 million in cash dividend for its Preferred Shareholders which is higher than the year before. The Bank is never remis in its commitment to honor its financial obligations and this is supported by its profitability performance and stable liquidity condition.

   NRBSL is a growing bank but not always in terms of number of branches and employees. In 2023 the Bank added only a handful in its organization from 195 individuals the year before to a 204-strong personnel complement. NRBSL welcome new faces in 2023 and learned to accept much-needed changes in its organization as it wished luck to those separated. Given the modern trend in business operations where distance and physical presence is negated by virtual technology, NRBSL is not after quantity of employees rather puts premium on quality of work and commitment.