Most of the initiatives Banco de la Producción undertook last year were contemplated in the group’s strategic plan and were related to re-structuring its liability composition, diversifying its asset base and increasing fee income.
The result of these efforts can be seen in the year-end figures. Net profits for 2005 were up 36.24%, RoE rose by more than three percentage points to 33.62% and assets grew by 14.78%. On the liability side, the bank began cutting interest rates on time deposits to reduce its share in total deposits and lower the cost of funds. The share of time deposits fell from 49% to 41% in the year. At the same time, the bank concentrated on attracting more savings deposits, which are stable and less costly, as well as demand deposits. By the end of 2005, deposits had increased and the cost of funds was reduced by more than 90 basis points.
“On the asset side, the strategy was focused on diversification,” says general manager Luis Rivas Auduray. “This meant lessening our exposure to the government sector and increasing our exposure to the private sector, particularly the credit card business and commercial loans. The bank grew its fee income from several sources, including income derived from the credit card business, service charges, wire transfers and foreign exchange transactions. Last year’s fee income was up 28% compared with a 10% increase in 2004.”
Banco de la Producción has invested heavily in lower cost alternative service channels, mainly e-banking and the ATM network.
