Surigao del Sur Rep. Johnny Pimentel is hoping that the national government would receive bigger cash dividends from the Land Bank of the Philippines after its planned merger with the Development Bank of the Philippines (DBP).
“There’s no question that the business combination will create a larger Land Bank with a greater capacity to generate new earnings,” he said.
“The new earnings, coupled with operating cost savings, will enable Land Bank to pay additional cash dividends on a regular basis to the national treasury in the years ahead,” he added.
Land Bank last declared and remitted to the treasury P8.5 billion in special cash dividends in June 2022, after posting a net income of P21.7 billion in 2021. The bank recently reported a net income of P30.1 billion in 2022.
“This augurs well for the government’s efforts to boost non-tax receipts that are badly needed to support social development programs,” Pimentel said.
Earlier, Finance Secretary Benjamin Diokno said the merger of the two state-owned banks, with Land Bank as the surviving entity, is projected to yield P5.3 billion in annual operating cost savings, or no less than P20 billion in the next four years.
Both Land Bank and DBP are covered by Republic Act No. 7656, which requires government-owned or-controlled corporations (GOCCs) to declare as dividends and remit to the treasury at least 50 percent of their annual net profits.
The law also empowers Malacañang to adjust the dividend rate higher or lower for any or all covered GOCCs, in the interest of the national economy and the general welfare.
During the Duterte administration, Land Bank’s dividend rate was reduced to zero percent for 2016, 10 percent for 2017, and then to zero percent again for 2018 and 2019.
The dividend rate adjustments, combined with fresh equity infusions from the government, enabled Land Bank to build up its capital reserves and provide low-interest loans to vulnerable sectors at the height of the COVID-19 pandemic.
Land Bank is the official depository of government funds, which account for 67 percent, or P1.9 trillion, of the bank’s total deposits.
The bank also has the social mandate to spur countryside development and extend credit to small farmers and fisherfolk and agrarian reform beneficiaries.