Thursday, November 15, 2007 Middle income earners increase earnings of Gaisano-owned bank
A CEBU-BASED development bank is benefiting from the rise of the middle income earners in Cebu.
Growth in the purchasing power of the local middle class has hiked Wealth Development Bank’s (WealthBank) consumer loan portfolio for housing and car loans, said Ferdinand “Dax” Vargas, bank consumer loans head.
The bank has now released some P200 million in housing loans to date as compared to only P40 million by the end of 2006, Vargas said.
It has pegged 10.25 percent in interest rate annually for its housing loan, which is lower than the 15 percent to 16 percent annual rate it offered five years ago, he added.
WealthBank has also released over P20 million worth of car loans, Vargas said.
“People are no longer contented with having one car,” he said in an interview.
Vargas said this is one of the key indications that the middle class market, especially in Cebu, Manila, Clark Economic Zone and Cagayan de Oro, have significantly expanded.
The growth, he said, is from the infusion of high dollar remittances contributed by overseas Filipino workers (OFWs) and the proliferation of young entrepreneurs.
“People are now very educated. You see a lot of people going into business,” Vargas said, adding that the low financing rates offered by banks and other financial institutions today have allowed more Filipinos to engage in small- and medium-scale businesses.
“Now is the best time to borrow as interest rates are really low,” he said.
Vargas said low interest rates, coupled with the strengthening of the peso against the US dollar, has created a suitable business environment in the country.
Wealthbank recently launched its second Cebu Used Car fair that allows car enthusiasts to purchase second-hand vehicles for a “special rate” of 13 percent per year for three years.
In January this year, Wealthbank has processed over 100 car loan applications, with 90 percent of applications approved. Among its clients are OFWs and their dependents, as well as middle income employees like call center agents.
The car fair, which will run until Nov. 18, is located at the Cebu Business Park fronting Metro Gaisano-Ayala.
Wealthbank, formerly Danao City Development Bank (DCDB), was established in 1966.
In 2001, the BSP and the Securities and Exchange Commission approved the acquisition of DCDB by the Metro Gaisano group, having increased its authorized capital to P500 million.
The Metro Gaisano group, also known as Vicsal Development Corp., is the bank’s majority shareholder while its equity partners are the Development Bank of the Philippines and the Land Bank of the Philippines.
Its existing branches are located at the Cebu Business Park, Ramos Street, Carbon Market area and in Mandaue City. (MMM)
