Chapter 1 - Present Situation (Where We Are Now)

This section of the Plan presents in capsulized form the historical operations and financial performance of PostalBank, for information, benchmark and guidelines in the development of the Five-Year Strategic Plan.

Historical Performance of the Bank

Deposits (by Type)

  • Deposits increased by 55% from P3.45 billion in 2006 to P5.35 billion in 2008, but decreased to P4.5 billion in 2009, which level was then maintained in the following year and up to July 2011. During the 5-year period 2006-2010, the annual average portfolio stood at P4.44 billion.
  • Savings deposits constitute (on the average) 93.9% of total deposits, while demand deposits comprise 3.4% and 2.7% for time deposits as of July 2011.

Figure 1. Deposits by Type, 2006-2010
Figure 1. Deposits by Type, 2006-2010

  • Private deposits increased by P1.4 billion from 2006 to 2008, but declined by an average of P350 million from 2008 to July 2011. Government deposits, on the other hand, have been steadily increasing for the last five years except in 2009, when a 2% decline occurred. Although government deposits went down by P214 million from 2008 to 2009, these again gained momentum in 2010 with an increase of P523 million and P21 million as of July 2011.
  • Deposit mix was already at the level of 53:47 government to private in 2008, but went down to the perennial 70:30 mix in 2010 due to massive withdrawals of private accounts. As of July 2011, deposit mix is 69:31 government to private.

Figure 2. Deposits by Source, 2006-2010
 
Figure 2. Deposits by Source, 2006-2010Loans

  • Lending efficiency peaked at 82% in 2006 but dropped to its lowest at 58% in 2008 as a result of the large amount of private deposits and low amount of loans. From 2008, loanable funds as well as lending efficiency have been decreasing, with 76% lending efficiency as of July 2011 which resulted from P2.2 billion loans against P2.9 billion loanable funds.
  • Loan level has been increasing at a rate of only 4% in the last five years or about P80 million in absolute value. It climbed from P1.8 billion in 2006 to P2.2 billion in 2008 due to new loan releases and stayed at that level until July 2011.

Figure 3. Loan Level vs. Loanable Funds and Lending Efficiency, 2006-2010
Figure 3. Loan Level vs. Loanable Funds and Lending Efficiency, 2006-2010 
Loans (by Type)

  • Consumption loans went up by 12% (or P114 million) from 2006 to 2008 when it peaked at P1.1 billion. Starting 2009, consumption loans have been maintained at the level of P1 billion until July 2011. Regular loans have been moderately increasing in the last five years, from P933 million in 2006, these reached P1.17 billion in July 2011.
  • In terms of loan mix, the share of consumption loans stood at 48% in 2006 while the remaining 52% were regular loans. In 2007 and 2008, the share of consumption loans went up to as high as 52%; however, it tapered off to 50% starting in 2009 up to 47% as of July 2011.

Figure 4. Loans by Type, 2006-2010
Figure 4. Loans by Type, 2006-2010Investments

  • Investments peaked at P3.4 billion in 2008 together with the increase in the deposit level, as excess funds are automatically placed in IBCL and IBODI in lieu of viable lending outlets, but fell to a low of P2.2 billion in 2010 also due to a sharp decrease in deposit portfolio. As deposits declined in 2009, investments also decreased, reaching the level of P2.4 billion as of July 2011. IBCL constitute 30% of total investments as of July 2011, while IBODI constitute 70% of total.

Figure 5. Total Investments, 2006-2010
Figure 5. Total Investments, 2006-2010Resources

  • In 2006, resources stood at P4.12 billion, increasing to P6.38 billion in 2008, and then slowly declining to P4.63 billion as of July 2011.

Capital

  • The trend in capital funds was almost flat at a little over P400 million due to provisions for loan loss as well as results of litigation in prior years charged against retained earnings resulting in capital funds of P410 million as of July 2011. However, per BSP computation, the adjusted capital is at the level of P132.79 million. With the capital restoration efforts of the new management, the adjusted capital as of September 30, 2011 stood at P247.14 million.

Figure 6. Total Resources, 2006-2010
Figure 6. Total Resources, 2006-2010Figure 7. Capital Funds, 2006-2010
Figure 7. Capital Funds, 2006-2010Net Income

  • Net income after tax has been declining in the last five years. From P25.19 million in 2006, it decreased to P19.18 million in 2008. However, in 2009 it again peaked to P24.35 million, but slid consistently thereafter, reaching a negative bottom line of P12.21 million as of July 2011. However, by the end of December 2011, it is forecast that the Bank will have a net income of P4.56 million.

Figure 8. Net Income after Tax, 2006-2010
Figure 8. Net Income after Tax, 2006-2010

Non-Performing Loans

  • Non-Performing Loans (NPL) Ratio has been in the range of 11% to 12% from 2006 to 2009. However, in 2010 it went up to as high as 14.45% due to increase in past-due consumption loans. As of July 2011, the new management has brought down NPL ratio to 13.76%, nevertheless, the PostalBank’s NPL ratio is way above the industry average of 7.5% per latest data from the BSP.

Return on Equity

  • Return on Equity (ROE) has been decreasing in the last five years from a high of 8.67% in 2006 to 4.06% in 2010. The decline has been due to decreasing net income and an almost static movement in capital funds. The Bank is also below the industry ROE of 7.22% as of December 2010. As of July 2011, the ROE is -2.96%.

Figure 9. Non-Performing Loans Ratio (NPL), 2006- July 2011 vs. Thrift Bank Industry NPL Ratio
Figure 9. Non-Performing Loans Ratio (NPL), 2006- July 2011  vs. Thrift Bank Industry NPL Ratio

Figure 10. Return on Equity (ROE), 2006- July 2011 vs. Thrift Bank Industry ROE
Figure 10. Return on Equity (ROE), 2006- July 2011 vs. Thrift Bank Industry ROE

Capital Adequacy Ratio

  • Capital Adequacy Ratio (CAR) has been decreasing in the last five years from 22.88% in 2006 to 16.41% as of July 2011 (per PPSB computation). However, also based on BSP (Bangko Sentral ng Pilipinas) computation, the Bank’s CAR is 7.26% which is below the minimum 10% which BSP requires. In this regard, new Management has instituted measures to increase the CAR to 11.77%.

Figure 11. Capital Adequacy Ratio (CAR), 2006- Oct 2011
Figure 11. Capital Adequacy Ratio (CAR), 2006- Oct 2011

PostalBank by the End of December 2011 

  • As of end-September 2011, PPSB has a net loss of P17.11 million.
  • By the end of December 2011, it is projected that the Bank will have a net income of P4.56 million
  • This is expected to be achieved via the collective efforts of all employees and the Management through profit maximization (thru more aggressive marketing of loans, selling of ROPAs) and bankwide cost reduction activities
  • Management has instituted major organizational and operational changes, as well as corrective measures that will result in a positive turn-around by the end of December 2011. 

 Table 1.  Projected Profit and Loss Statement, December 2011

  
Interest Income419,465,095.05
Interest Expense95,820,600.25
Provision for Losses on Accrued Interest Income from FA115,686.38
Net Interest Income323,528,808.42
Non-Interest Income(Loss)78,786,277.69
     Fees and commission Income59,079,579.87
     Gains/(Losses) on Financial Assets & Liab. Held for Trading35,340.43
     Foreign Exchange Profit (Loss)(27,063.91)
     Gains from Sale/Redemption/Derecognition of Non-Trading-
          Financial Assets and Liabilities2,301,372.47
     Gains/(loss) from Sale/Derecognition of Non-Financial Assets(3,032,847.25)
     Other Income20,429,896.08
Non-Interest Expense372,018,748.56
     Compensation and Fringe Benefits146,285,243.32
     Taxes and Licenses20,223,693.57
     Fees and Commissions1,639,923.86
     Other Administrative Expenses167,796,973.46
     Depreciation / Amortization35,468,256.16
     Provision157,575.00
     Impairment Loss447,083.19
Losses/(Recoveries) on Financial Assets:25,733,276.45
Bad Debts Written Off-
     Provisions for credit losses25,768,947.30
     Recovery on Charged-Off Assets(35,670.85)
Net Profit (Loss) before Income tax4,563,061.10
Provision for Income tax-
NET PROFIT (LOSS)4,563,061.10

Benchmark and Status of PostalBank in the Thrift Bank Industry 

Considered as young in the banking industry (17 years in operation), PostalBank managed to gain a reputation as a competitive bank and ranks high among the top performing thrift banks in the country for 2010. As of end-December 2010, out of the 73 thrift banks (1,418 total thrift banking offices) in the country, PPSB ranked as follows: 

Table 2.  Projected Profit and Loss Statement, December 2011 

Financial IndicatorAmount as of December 2010Ranking
AssetsPhP 5,316,678,47519
LoansPhP 2,524,584,09019
DepositsPhP 4,555,925,65315
InvestmentsPhP 1,869,680,06411
CapitalizationPhP 444,930,68730
ROE4.06%31

See Annex B - Complete list of Ranking of all Thrift Banks for each Financial Indicator.