BDO Network Bank, the rural bank of BDO Unibank Inc., is looking at doubling the number of branches and offices to 480 within the next four years as the bank intensifies its lending to micro, small and medium enterprises (MSMEs).
Although he did not provide more details, Jesus Antonio S. Itchon, president of the bank which used to be One Network Bank, said the bank is also “aiming to hit 300 branches and offices by end of the year.”
“We hope we can hit the target,” Itchon told TIMES at the sidelines of a press conference Friday as he assured that the bank will continue to concentrate on expanding in Mindanao, its base, even when it has started penetrating Luzon and the Visayas following the buyout made by BDO Unibank in July 2015.
At present, the bank has about 103 branches in Mindanao, 23 in the Visayas and 24 in Luzon and the rest are loan offices.
“Although we cannot say now how many branches will be put up in Mindanao in the next four years, rest assured that we will continue to look for areas to expand in the island,” he said as the bank, which was majority owned by the Consunji group before the buyout, first concentrated on penetrating the areas of Mindanao that were either unbanked or underbanked but had the potentials to grow.
Among key growth areas that the bank is concentrating on, said Karen L. Cua, senior vice president, is growing its loan portfolio to MSMEs, a window where borrowers can obtain a loan of up to P500 thousand without collateral dependent on how viable the businesses are and how credit-worthy their owners are.
Chua told TIMES the portfolio, which has reached to about P2 billion since the bank started rolling it out in October 2018, is its answer bank to the clamor of both the government and the small borrowers for an access to funding assistance so they could grow their small businesses.
The average processing time for these types of loans, she said, is about three days so that the “bank will be competitive with” other providers.
“The reason commercial banks do not process micro loans is that for the same requirements the amount involved is very small and the time (of processing the loans) s the same), so how can you provide small loans when you can only process so much for the same number of loans (compared with those whose borrowers are big corporations who have very good credit standings and bigger loan amounts needed)?” she added.
Both officials, however, said that it is good that the rural bank has a good parent company, BDO Unibank, which has not only a deep pocket to help it grow but also a very strong technical capability in terms of banking processes.
The challenge to the bank in of terms of technology, said Itchon, is that the “infrastructure in the countryside is very poor.”
Another challenge is that the country has yet to have a national identification system that will allow financial institutions like banks to verify the identities of the persons trying to avail of services, particularly loans.
“Until then (when the national identification system is rolled out), that would be the challenge in implementing credit checking,” he said.
These challenges have motivated the bank to continue expanding its footprints in rural areas as, because it is present in the communities, it is able to identify on its own those who it wants to lend to even when these MSMEs do not have credit ratings that could back their identities, he said.
BDO Network Bank was the successor of the One Network Bank, a result of a consolidation of the Network Rural Bank of Davao City, the Rural Bank of Panabo (in Davao del Norte) and the Provident Rural Bank of Cotabato in 2004.
The consolidation materialized after Alex V. Buenaventura, whose family owned the Rural Bank of Panabo, was tapped to manage the three rural banks, then all profitable, in 1997.
In an earlier interview, Buenaventura, who retired as bank president after the buyout, told TIMES that because of a single management and a single system at that time, it was logical for the three banks to consolidate.