The Land Bank of the Philippines (LANDBANK), through its digital arm Overseas Filipino Bank (OFBank), is contemplating the introduction of digital loans. This initiative was revealed by LANDBANK President and Chief Executive Officer, Lynette V. Ortiz, at a recent central bank event.
Lynette pointed out the importance of a robust risk framework when offering lending, acknowledging the challenges faced by many digital banks in this area.
“We are actually considering that (digital loans). We’re looking at it. As of right now, the loans of OFBank are mostly salary loans. But we are taking a serious look and making sure first that we have the proper risk framework, because that’s something a lot of digital banks are struggling with,”
OFBank aims to complete its study on this new digital loans venture within the first half of the year. Lynette further highlighted the necessity of a cautious approach in loan distribution, underpinned by strong risk management strategies.
“You have a deposit base, you have funding, but you also have to be very circumspect around how you’re going to roll out loans and just make sure that you have the proper risk management framework in case,”
Emphasising the strategic direction for OFBank, Lynette remarked,
“We’re really looking to put more legs in terms of the strategy for OFBank.”
Currently, the OFBank loan portfolio is predominantly composed of three loan products, mostly targeted at salary loans. As a subsidiary of LANDBANK and the official digital bank of the government, OFBank is one of the six digital banks licensed by the Bangko Sentral ng Pilipinas (BSP) in the Philippines.
In a financial context, LANDBANK reported a significant growth in the third quarter of 2023, with its net income increasing by 24% year-on-year to P31.85 billion. This rise is attributed to an upsurge in loans and yields from investments, accounting for 90.9% of its P35-billion profit target for the year.
Featured image credit: Edited from Freepik