LAND BANK of the Philippines (LANDBANK) is aiming to deliver higher net income for the full year despite a first-half decline, betting on sustained loan growth while carefully managing credit risks.

The state-run lender's net income fell 4.04% year on year to P24.21 billion in the first semester, down from P25.23 billion a year earlier, according to its financial statement posted on its website.

LANDBANK President and Chief Executive Officer Lynette V. Ortiz, speaking to reporters on the sidelines of an event on Monday, said the bank is targeting low single-digit net income growth for the year.

"It's hard to say at this point. But suffice it to say, what we're doing is to really make sure that we are efficient in the use of our balance sheet, and that we continue to be consistent with our mandate. So, we are really trying to expand our loan portfolio, our outreach to farmers and MSMEs (micro, small, and medium enterprises). So, hopefully with all of these activities, our projects, we're able to still sustain decent growth," she said.

"Everything is so measured for us, even in our credit provisioning, our management of risk. So, we're hoping to eke out some growth by the end of the year. We're making every effort to do that."

Ortiz noted that the bank remains cautious amid a weaker operating environment, highlighted by the slowdown in gross domestic product (GDP) growth last quarter.

"We're doing what we can within the factors and macroeconomic environment that we're dealing with. I'd say that I think it's really all about efficient balance sheet management. Also, managing our risk very cautiously and very well, while continuing, of course, on our developmental mandate," she said.

Philippine GDP grew by 2.3% in the second quarter, decelerating from 5.4% in the same quarter last year and 2.8% in the first quarter. That marked the slowest expansion since the fourth quarter of 2009, excluding the pandemic period. For the first semester, GDP growth averaged 2.6%, falling below the government's 3.5%–4.5% full-year target. The slowdown poses particular challenges for LANDBANK, whose developmental mandate centers on lending to agriculture and MSMEs — sectors historically sensitive to economic downturns and among the least banked segments of the economy.

Separately, LANDBANK is considering making its waiver of person-to-government and government-to-government transfer fees permanent. The waiver had initially been planned to run only until December.

"That's very, very possible. That's part of our mandate, as I said. But it clearly requires approvals internally, but I think yes, we're heading in that direction," Ortiz said.

"Of course, there is an impact, right? But we are trying now to balance what we have lost in terms of income with our developmental mandate and our financial inclusion mandate. So, it's imperative for LANDBANK to really be able to extend these services. But I guess for us, it's really a matter of how we're going to recoup all of what we've lost."

The fee waiver aligns with LANDBANK's broader role as a primary conduit for government financial inclusion initiatives, serving unbanked and underserved communities that private lenders typically reach less effectively.

On funding, LANDBANK is looking to raise at least P10 billion through a bond issuance next year, as the bank expects more favorable market conditions.

"I mean, rates are quite high. So we're planning to likely do that next year," Ortiz said. "In the last issuance, we raised P50 billion. But it all depends. For it to be worth it, I would say probably over P10 billion."

Ortiz had previously indicated the bank is considering a sustainability-themed issuance early next year.

LANDBANK last tapped the domestic debt market in February, raising P50 billion through its dual-tenor Agriculture, Sustainability, Environment, and Socioeconomic Development (ASENSO) Bonds, exceeding the initial P30-billion target. The 1.5-year Series B tranche was priced at 5.1714% per annum, while the three-year Series C papers were sold at 5.5615% per annum.

The ASENSO Bonds marked the first corporate bond offering in the Philippines available via direct in-app purchase through the LANDBANK Mobile Banking App.

— Aaron Michael C. Sy