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The FICOBanking Way 2019

In 2019, FICOBank confronted a number of challenges. These include the downturn in domestic economic growth, effects of global headwinds, weakening of the value of peso, slowdown of business prospects, increase in fuel prices, plummeting of palay prices, pressure in regulatory compliance, closure of some rural banks, entry of big banks in retail banking, parity of financial products and services, occurrence of natural calamities, and so forth.

All of the foregoing challenges have overarching implications to the banking industry, in general. It has been repeatedly said that if a bank cannot cope with the business environment where it is subsumed, the same will wind up in a dismal failure. For us, at FICOBank, we were able to weather the 2019’s economic headwinds, business disruptions and regulatory pressures, as we rely on the resilience of our banking network and the institutional capabilities that we have developed over the years.

Being firmly focused on our 2019’s five points of interest, with a mnemonic of PECMO (provisioning, external factors, compliance issues, management of income and expenses, and others), enabled us to be on track in our Bank’s strategic direction and business operations. Here is a rundown of our Bank’s winning ways and success streak, through PECMO, for the year in review. Provisioning is a reserve that is intended to absorb expected future loan losses. By recognizing future expected losses early on, through our own Loan Loss Methodology (LLM), we could improve further our lending standards. Aside from this, larger reserve will increase our Bank’s lending capacity in any economic condition and/or operating environment. As of end-December 2019, our Bank has a total reserve for potential loan losses amounting to Php102.67 million. This figure represents 73.20-percent cover of our non-performing loans.

Throughout the year, we remained vigilant on the external factors that would significantly affect our lending operation. With the inauspicious impact of the Rice Tariffication Law (RTL), as well as the detrimental effects of the African swine fever (ASF) and Typhoons Ramon and Sarah, we maintained our preparedness through our Business Continuity Plan (BCP) and Contingency Plan on Credit Risk (CPCR). We recognized these matters/events to potentially heighten the credit risk in our Bank’s loan portfolio. To mitigate the risk, we carried out our crisis response procedures and adopted some control measures. Thus, our past due ratio at year-end was pegged at 4.79 percent, which is even lower than that of the previous year’s record of 5.32 percent.

Compliance is a business enabler and not a burden, as it helps us do the right things in our affairs and operations. By complying at all times with the applicable laws, regulations and standards, our Bank’s biggest beneficiary is its business itself. Non-compliance is unpardonable and can have far-reaching implications—even business closure. For this reason, we endeavored to address all the pressing regulatory issues and comply altogether with the requirements of the applicable laws of the Philippines, as well as the regulations of the Bangko Sentral ng Pilipinas (BSP) and the Cooperative Development Authority (CDA).

We are fully aware that to stay for good in the business of banking, it is important for us to sustain our Bank’s profitability by managing well our income and expenses. There’s no substitute for it, as profitability is vital to our business operations. Through our strategies, not only in the management of our revenues and expenses but also of our assets and liabilities, our Bank remained successful and profitable in its business. With it, our Bank ended the year with a record-high net income of Php145.31 million. We performed remarkably well because of our robust revenue-generating activities (sales of high-earning loan products, handling of key accounts, disposal of acquired properties, delivery of fee-based services, collection/restructuring of past-due accounts and recovery of write-offs) and effective cost-cum-risk management approaches (generation of low-cost deposits, pre-termination of high-cost bills payable, reduction of controllable expenses and preclusion/mitigation of risks).

On other matters, we executed our 2019’s result-based strategies and impact-based initiatives, as they should be. Although we aimed to achieve all our financial objectives, we ended up behind target in other key result areas. But our overall financial performance is still very satisfactory. On the other hand, we were very successful in carrying out our key reform initiatives. Policies, procedures, processes and systems were made available for the effective and efficient functioning of our Bank. Programs, projects and other initiatives were also undertaken in support of our 37 operating units and two business lines.

Our total assets in 2019 rose to Php4.35 billion, from the previous year’s level of Php4.34 billion. Our average daily balance (ADB) in loans of Php3.24 billion, ADB in deposits of Php2.50 billion and capital accounts of Php1.08 billion grew by 5.75 percent, 3.85 percent and 14.01 percent, respectively. This year, we were able to register the billion-peso level in our capital. It’s another milestone in our Bank’s history.

It may also be worth mentioning that we opened our three new branches in the Science City of Muñoz (Nueva Ecija), Tabuk City (Kalinga) and Aliaga (Nueva Ecija) in February, March and October of this year, respectively. To meet our goal in banking network expansion, as specified in our Five-Year Strategic Plan, dubbed “FICOBank 2020,” we submitted to the BSP our application for authority to establish three branch-lite units (BLUs). Subsequently, the BSP granted us the authority to establish our Bank’s BLUs in the municipalities of Cabatuan, Cordon and Ramon, all in the province of Isabela. Upon opening of these BLUs in 2020, the number of our Bank’s operating units will increase to 40. With it, our Bank is expected to achieve its objective in “near-you” servicing. Thus, we can expand our market reach, bolster our production potential and eventually become even bigger.

For 2020, our time, efforts and resources will be directed toward these new points of interest, namely: strategic planning, credit operation, organizational reengineering, remedial management and e-technology platform—or SCORE, for short. We believe that the same will bring about exceptional results in our operational and financial scorecard. With SCORE, the shareholders and other stakeholders of our Bank can expect for an even better business performance at year-end 2020.

For what has been in 2019, we thank you—our shareholders, directors, officers, staffers, funders and customers—for your untiring support to, and unceasing trust on, our Bank.





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