BANK OF MAKATI (A Savings Bank), Inc. expects the Bangko Sentral ng Pilipinas’ (BSP) rate-cut cycle to boost its profitability next year, its top official said.
“Slowly, as they (BSP) bring down the policy rates, [our income is] improving. Hopefully, it will catch up by next year in terms of income growth,” Bank of Makati President Luis M. Chua told BusinessWorld.
He said elevated borrowing costs have caused their net income to grow slower than expected so far this year.
“It’s on track — meaning year on year, it has grown, but by almost the same in terms of income due to high cost of funds because during the first part of the year, we were dealing with high interest rates,” Mr. Chua said.
Still, the bank expects its loans to post double-digit growth this year.
“Usually, our year-on-year growth target is about 10-20%. I think we will be hitting around 15% by yearend,” he said.
Bank of Makati is mainly focused on motorcycle financing, with 70%-80% of its total loan book made up of motorcycle loans.
Its gross loan portfolio stood at P36.57 billion at end-September, down from P39.06 billion as of end-March, its published balance sheet showed.
Meanwhile, it had assets worth P52.88 billion in the same period, ranking fifth among thrift banks, according to BSP data.
The Monetary Board this month reduced benchmark borrowing costs by 25 basis points (bps) for a third straight meeting, bringing its policy rate to 5.75%.
The BSP has so far slashed rates by a total of 75 bps since it began its rate-cutting cycle in August.
BSP Governor Eli M. Remolona, Jr. said that while they remain in an easing cycle, 100 bps worth of cuts next year may be “too much” amid inflation concerns, also reiterating that they will continue to reduce rates in “baby steps.”
Still, Mr. Remolona said the BSP is “neither more dovish nor less dovish” and is open to delivering another cut in their first policy meeting in 2025. — Aaron Michael C. Sy
