Salmon Group to infuse additional P1.2B capital in rural bank

Salmon Group is set to infuse some P1.2 billion in capital to its rural banking unit this year and in 2026, as it seeks to continue to double its key metrics — including its loan book — every six to nine months, top officials said Wednesday.

According to Salmon co-founder Raffy Montemayor, the additional capital includes P600 million that is set to be infused before the end of 2025, while the remaining P600 million will be infused in 2026, depending on the needs of the bank.

“That’s our rough estimate what the bank needs. There’s a lot more that the parent company, Salmon Group Limited, has to inject, but you want to make sure that you’re injecting it at the right time as it’s needed by the bank,” he told reporters in Makati City.

The group in June raised $88 million from its fundraising round, including $60 million drawdown under a three-year $150-million Nordic bond framework agreement, and $28 million of new equity from blue-chip US institutional investors and existing shareholders of Salmon.

“We’re injecting quite a bit of capital into the bank. I mean, by now, we pretty much will be well above most of the national banks in terms of capitalization fairly soon, and we’ll be injecting a lot more money into the banks,” Montemayor said.

“By reinvesting our net income into developing more products and services, that will allow us to grow, to double every six to nine months. I think that’s quite a key component of it,” he added.

Salmon Bank (Rural Bank) Inc., which changed its name from Rural Bank of Sta. Rosa (Laguna) Inc. in August, ended the third quarter of the year with P786.631 billion in equity, climbing from the P706.974 million in the previous quarter and the P215.554 million the same quarter last year.

The bank is also looking to upgrade its license to a thrift bank, which would require a higher capital than a rural bank, which Montemayor said Salmon Bank already meets.

“We meet the minimum capital required for a thrift bank, but we want to make sure we complete the key investments in the people and in technology before we apply,” Montemayor said.

“We want to make sure that the bank is ready to put its foot forward as a thrift bank which is really nationwide scale and brings with it a higher level of attention, and so we want to make sure that the bank is ready to meet all of that,” he added.

The bank in August also submitted an application for an advanced electronic payment and financial services (EPFS) license with the Bangko Sentral ng Pilipinas (BSP), which will allow customers to make more digital services such as fund transfers and bills payments.

Montemayor said it could take six to 12 months to secure the license from the central bank, as recorded in applications of other banks.

“I think what’s important is from a technology side, we’re ready. As a bank, we’re ready. I mean the application has been developed. There is lots of work that’s been put into the engineering side, so by now we have hundreds of really, really, really talented engineers that are propelling the preparation for it. It’s really a question of just finalizing the regulatory dialogues,” he said.

Salmon ended September with a P1.596-billion loan book, up from P1.215 billion in the second quarter, and P690.999 million in the same quarter last year. Montemayor earlier said the bank aims to sustain the growth in the first half, when loans grew by 1.4 times. —AOL, GMA Integrated News