Fellow Stakeholders, Queen City Development Bank’s major task is to serve as a reliable partner to our clients by responsibly offering financial that enable growth and economic progress. Our core business: safeguarding assets, lend money, service payments and investing funds. We have 42 years of banking experience helping our clients. We protect our depositor’s savings and help them make the purchases - from everyday transactions running their businesses to building a home - that improve the quality of their lives. We advise our clients on how to invest for their future.

We work hand in hand with businesses whether to enhance their daily operations, or the working capital they need, to supplement their receivable and inventory position day-in and day-out. By lending to companies, we help them grow, creating jobs and real economic value at home and in communities we serve. We provide financing support to agri-businesses, hospitals, schools, and private individuals, creating sustainable infrastructure, like food, building structures and other vital activities. These business potentials will enable us to create the best outcomes, and carefully manage risk.

As bankers we strive to earn the public’s trust by persistently adhering to the highest ethical standards. We observe and inculcate a culture of responsible banking, transparency, and service excellence. In doing these things, we create solid relationship and lasting impact to our clients and customers.

Standing on solid ground

From a financial perspective, 2022 was a normalization of many but not all of our key business drivers and the provision of much of the loan-loss reserves that we had set aside during the year. During the year, Queenbank generated gross revenue of P169 million. As the tight business condition persisted, and notwithstanding the exhaustive efforts we undertake to improve on our revenue taking, credit remained weak. We ended the year on a solid balance sheet with minimum liquidity ratio of 70.61% and a capital adequacy ratio of 39.74%.

Despite the headwinds of the low rate environment in the early part of the year, deposit generation gained momentum registering double digit growth. We saw vigorous client engagement and digital adoption, which showed rise of account enrolment. We introduced new products and later expanded instant payments and cashless capability to different markets putting us in equal footing with competitors. our strategy of providing a strong banker-client relationship has paid-off. We are confident placing Queenbank on the right path to improve returns in the long term and deliver the full benefits of our franchise to all our stakeholders.

It is also during the year that we opened three (3) branches in the area of Alimodian, Leon, and San Miguel. The opening of these branches is in line with the bank’s expansion plan as printed in our approved continuity plan. We are still in the process of completing the expansion plan by opening a branch in Zarraga, and in Cabatuan Iloilo. Likewise, these is an answer to our regulators’ plea to provide access to cash to the populace and at the same time parading our footprint in these “unbanked area”. We are also in the advance process of formally acquiring three (3) more rural banks who have agreed to sell their major stake subject to final completion of a third party due diligence.

Our focus

As we focus our resources, we also have made some hard decisions about what we can do. Sensing the need to enhance our business, we began the year with a goal of increasing our portfolio, roll-out new product, and improve risk management. To begin with, we worked on setting our emphasis on digital transformation and customer friendly cashless products. This is a timely approach to the pandemic weary economy where customers started using digital transaction though various platform. In addition, we re-enforced product accessibility by adding Western union (acceptance and pay-out remittance) and Bayad Center facilities.

To support strong customer interaction, we ensured a culture characterized by quality service which is a formula for success. We imbued in our line personnel the value of performance as a basis for growth. This is part of an effort to boost opportunities and to increase accountability for how our personnel should approach their daily work. And by developing the sense of ownership that our people feel for our franchise, we are building a culture that’s focused on delivering the best outcomes for all our stakeholders.

Last year, we submitted our plan with our regulators to correct the findings as embodied in our 2021 result of examination and keeping them updated of our progress. Compliance is indeed important noting that we are in the process of completing the planned merger with an affiliate Queen City rural Bank, Inc. which is expected to take place in the third quarter of 2023. This marriage with our franchise as the surviving entity will reduce work duplication, better management, strong synergy, and create a better and bigger institution. This is about putting Queen City Development Bank in the position to compete with its industry peers.

Taking into account our growth plan, the investments we are making in our businesses and efficiencies that will come out of our work, we believe we can increase shareholder value in the medium term. over the longer term, I believe that our strategy will lead to a higher-quality earnings mix, and we’ll further increase our returns as a result.

Expectations for 2023

Looking at the early part of 2023, our main concern right now is inflation. This problem reduces people’s ability to spend. Cost of essential products like food, power, and fuel have gone up exponentially. For us, our direct hit will be manpower cost and operational expenses. The united States and Europe is expecting recession and most economists believe that growth will slow down. undoubtedly, the ongoing war in ukraine and the collateral adverse it brings to the world can now be felt. We need to adopt to the current situation, help to raise income, and build strong financials. Doing business in the midst of these multidimensional crises have made us learn the importance of stepping up and working doubly hard during difficult times.

2023 will also be a year of increased digitalization for the banking industry. We will continue to work with our technology partners in different areas like branch banking enhancements, and enhanced customer servicing. Many factors will come into play in the coming months such as fluctuating oil prices and higher interest rates, higher food basket index, and strong local consumption. My advice to our personnel is to be resilient as opportunities would open up amid this difficult environment.

There may still be move from the BSP to continue rate hikes into the first quarter of 2023 until such time that inflation will cool down. This concern does not bode well to banks as high lending rates will affect lending appetite of businesses. Theclosure of two medium sized banks in the uS due to massive withdrawals from its depositors added concerns to the ongoing situation. Analysis obtained from corporate economists, think tanks and credit watchers suggest that banking systems in emerging economies of Asia like the Philippines are relatively unaffected by the failure of Silicon valley Bank and Signature Bank. however, they all agreed that adverse impact from ripple effects could not be discounted.

We’re optimistic though that our investments in technology and people will propel Queen City Development Bank forward in 2023. We intend to remain focused on supporting our clients, investing in what they need, as we realize our mission of providing service to the market we serve.

We expect for business to rebound in the next 12 months as we see the benefits of a fully reopened economy. Latest survey conducted by Business Expectations Survey (BES) of the Bangko Sentral ng Pilipinas (BSP) covering 1,554 firms including 582 that are based in Metro Manila drawn from random from the list of Top 7,000 corporations ranked based on total assets in 2016-17 indicate an improved confidence on the next quarter. Businesses include food and beverages, electronic parts, computers and laptops, paints, garments, airline tickets and loan products. respondents likewise expect improved business activities and operations, and a seasonal uptick in demand over the summer months. overall, 61.9% compared to the 46.2% obtained a quarter ago see a better business outlook for 2023.

our environmental, social and governance (ESG) agenda is a reflection of the special responsibility for our Bank to help solve many of society’s toughest challenges, such as the impending climate crisis. over the past months, we have been working mapping out how we are going to get there, rolling up our sleeves to partner with our clients and guide the industry forward. Earlier this year, we released our initial plan, setting specific guidelines for our ESG framework. This framework will set the stage for the commencement of various training activities for our personnel in complying this new regulation. As we look to the horizon, the stakes could not be higher – the banking industry is only becoming more complex and more competitive. We are excited about the work we have done over the past year to focus our strategy on where we can grow. And we are confident we have put Queen City Development Bank on the right path to improve returns over the long term and deliver the full benefits of our firm to all our stakeholders.