Bank of the Philippine Islands

BPI: Fresh P50B from stocks rights offer to boost loan book

Ayala Corp.’s Bank of the Philippine Islands (BPI) yesterday listed new shares under a recently-concluded P50-billion rights offering.

The money was raised to further strengthen BPI’s balance sheet as it sought to expand its business.

One area for expansion was its retail loan portfolio, currently accounting for about 20 percent, BPI president and CEO Cezar P. Consing said on Friday. The bulk still goes to the corporate segment.

While BPI was a major player here, Consing said there was further room to grow. He cited areas such as auto, housing and personal loans, that could bring the retail loan portfolio to about 30 percent.

Money from its rights offer will allow BPI to invest more in streamlining its platform while simplifying the process for handling  retail loans.

On Friday, BPI listed 558.66 million shares, valued at P89.50 apiece, or a total of P50 billion.

The new shares were issued to shareholders on record, at a ratio of one new common share for every seven shares held. The total amount was equivalent to 14.2 percent of BPI’s outstanding common shares.

BPI Capital Corp. was the sole global coordinator and lead manager, sole domestic manager, and domestic bookrunner and underwriter. Deutsche Bank AG, Hong Kong Branch, Goldman Sachs (Singapore) Pte. and J.P. Morgan Securities plc were joint international bookrunners and underwriters.



BPI posts flat net income of P6.25 billion in Q1 2018

The listed Ayala-led lender remains less exposed to interest rate risk, as its holding in securities only increased by 2.3% to P309.95 billion from January to March this year

MANILA, Philippines – The Bank of the Philippine Islands (BPI) saw a flat net income of P6.25 billion during the 1st 3 months of 2018, due to lower non-interest income as well as higher costs and expenses.

BPI, the Philippines' 3rd largest bank in terms of assets, told the Philippine Stock Exchange (PSE) on Monday, May 7, that its net income for the 1st quarter of the year remain unchanged from the P6.25 billion recorded in the same period a year ago.

Its revenues slightly increased by 2.7% to P18.45 billion during the 1st quarter of 2018, from the P17.96 billion in the same period in 2017.

BPI saw its net interest income rise by 8.9% to P12.51 billion in the 1st 3 months of 2018, from P11.49 billion, driven by the expansion in average asset base.

The lender's interest income from loans grew by 18.4%, on the back of improved loan yields.

The growth in interest income from loans, however, was tempered by the higher interest expense, partly due to higher documentary stamp tax (DST) rates on deposits that increased the cost of funds by 5 basis points. (READ: A history of trust: The Philippines' first bank)

BPI's total loan book surged by 17.2% to P1.21 trillion in the 1st quarter of 2018, from P1.03 trillion in the same period in 2017, thanks to higher corporate loans.

Its deposit base also booked a double-digit growth of 10.4% to P1.59 trillion in the 1st quarter of 2018, from P1.44 trillion in the same period a year ago.

BPI remains less exposed to interest rate risk, as its holding in securities only increased by 2.3% to P309.95 billion, with about 90% of the portfolio hold-to-collect.

Meanwhile, its non-interest income decreased by 8.1% to P5.94 billion, compared to P6.46 billion, dragged by lower income from trust and investment management fees, securities trading, as well as asset sales.

BPI added that manpower costs and premises costs were higher by 9% due to increased headcount and the buildup of microfinance branches.



BPI sets up $2-B MTN facility

Ayala-led Bank of the Philippine Islands (BPI) has set up a medium term note (MTN) facility worth up to $2 billion to obtain flexibility in raising funds as needed.

The MTN program was recently approved by the bank’s board in this amount or its equivalent in other currencies, BPI said in a disclosure to the Philippine Stock Exchange on Thursday.

The 166-year-old bank said this was “part of the bank’s initiatives to maximize flexibility in accessing funding expediently.”

The issuance of notes under the program will be subject to market conditions and will be determined by requirements of the bank’s business, the disclosure said.

An MTN program allows an issuer to have constant cash flow coming in from its debt issuance, typically with tenors of five to 10 years. This allows a company to tailor its borrowing to meet its financing needs. Such notes allow the issuer to register with the Securities and Exchange Commission (SEC) only once, using the shelf registration window, instead of every time for differing maturities.

A corporate MTN can be continuously offered by a company to investors through a dealer with investors being able to choose from different maturities. As such, they are different from corporate bonds because they can be offered to investors by the issuer’s agent instead of being underwritten by investment banks and then sold to the public in a tranche.

Meanwhile, BPI seeks to elevate the bank’s digital infrastructure to bring innovative services to existing and future clients as well as to support the Bangko Sentral ng Pilipinas’ (BSP) initiative to develop a National Retail Payment System (NRPS), which involves policies and standards for a “cash-lite” economy.

“It’s about shaping and creating a whole new experience for our customers through digitalization, offering them a better, safer, more convenient way to bank with us. A cash-lite economy will bring significant benefits to our country,” BPI president Cezar Consing said in a statement.

“This long-term digitalization journey will enhance our extensive network of ATMs, CAMs (Cash Acceptance Machines), online facility, and mobile app to enable us to offer convenient, self-service banking,” he added.

BPI Enterprise Services head Ramon Jocson said the process of digitalization, despite inevitable hiccups along the journey, would eventually lead to exceptional customer experience as more people gain more confidence in doing online and mobile transactions.

“Many of BPI’s clients now are digitally savvy. Many of our clients have come to embrace technology because of the convenience, safety and reliability it offers. The proliferation of smartphones has also stimulated innovation, allowing our customers to save time through a wide array of transactions they can do anytime and anywhere,” he said.



BPI to offer up to $2-B medium term notes

BANK of the Philippine Islands (BPI) said it has been authorized by its board to establish an up to $2 billion dollar-denominated medium-term note (MTN) program, with the notes to be listed in Singapore.

BPI said in a filing on Friday that the MTN program will help the bank “maximize flexibility in accessing funding expediently.”

BPI has tapped BPI Capital as sole global coordinator and lead arranger for the program, while Deutsche Bank, HSBC and J.P. Morgan will serve as joint lead arrangers.

The arrangers, along with BofA Merrill Lynch, Citigroup, ING, Mizuho Securities, MUFG, Standard Chartered Bank, UBS and Wells Fargo Securities, were appointed as dealers.

Philippine National Bank and Rizal Commercial Banking Corp. have also tapped the foreign debt market recently, raising $300 million and $150 million, respectively, from medium-term note facilities.

In April, BPI raised P50 billion through a rights offer, selling 558.7 million common sharesat P89.50 per share.

Proceeds from the fund-raising activity will be used to finance its digitalization program, expand its retail loan portfolio and put up more branches.

BPI, the third-largest bank in the country in terms of assets, booked a net profit of P6.25 billion in the first quarter, little changed from a year earlier, due to lower trading gains. 



BPI obtains investment grade rating from Moody’s

Global debt watcher Moody’s Investors Service has assigned an investment grade of “Baa2” long-term foreign currency senior unsecured rating to the Bank of the Philippine Islands’ $2-billion medium-term note program.

Moody’s said in a statement Monday the rating was in line with the bank’s “Baa2” foreign currency deposit rating.

Moody’s said the notes issued under the program constituted the issuer’s direct, unconditional, unsubordinated and unsecured obligations, and would rank pari-passu with the bank’s other senior unsecured obligations.

“The rating is underpinned by BPI’s baa2 baseline credit assessment and Moody’s expectation of a very high probability of support for the bank from the government of the Philippines (Baa2 stable) in times of need. The rating does not receive an uplift because the bank’s baa2 BCA is already at the same level as the sovereign rating,” it said.

Moody’s said the ratings did not apply to any individual notes issued under the program. Ratings on individual notes issued under the program will be subject to Moody’s satisfactory review of the terms and conditions set forth in the final base and supplementary offering circular, and the pricing supplements of the notes to be issued.

“BPI’s baa2 BCA takes into account the bank’s consistently robust capital and liquidity profiles, which reflect disciplined and prudent business growth,” Moody’said.

It said BPI’s MTN program rating of (P) Baa2 was at the same level as the sovereign rating of the Philippines. “It is unlikely for BPI to be rated above the sovereign, as we view the correlation of risk between the bank and the sovereign to be high.”

Moody’s said if the sovereign was upgraded, it cited some factors that could result in an upward revision of the bank’s BCA and ratings.

These are the consistent reduction in the bank’s nonperforming assets, non-performing loans, and foreclosed assets; a steady improvement in the bank’s profitability levels, as reflected by improvements in core earnings and reductions in credit costs; or higher levels of loss-absorption capacity, as reflected by steady improvements in the bank’s capitalization.



...negative...first half earnings decline

BPI’s income declined 5.7% to P11.03-billion in first semester

Bank of the Philippine Islands, the third-largest lender in terms of assets, said net income in the first half fell 5.7 percent to P11.03 billion from a year ago, on lower trading gains and higher expenses for digital technologies.

BPI said in a statement total revenues hit P37.22 billion, as net interest income grew 11.5 percent to P26.21 billion. Asset base expanded 9.3 percent, while the net interest margin improved 8 basis points. 

The bank said interest income from loans grew 21.1 percent year-on-year, led by a 16-basis-point improvement in loan yields. Cost of funds increased 17 basis points in the six-month period, on higher documentary stamp tax on deposits. 

It said net interest margin expanded 15 basis points on a quarter-on-quarter basis, amid favorable loan repricing and liquidity provided by the proceeds from the recent stock rights offering which allowed for the paydown of more expensive time deposits. 

Net interest margin increased from 2.91 percent in the first quarter to 3.06 percent in the second quarter.
Total loans reached P1.22 trillion, up 15.7 percent year-on-year, on the back of strong growth in corporate loans and credit cards at 17.1 percent and 22.7 percent, respectively. 

Total deposits went up 7.5 percent to P1.53 trillion, with current and savings accounts registering faster growth of 10 percent. The bank’s  Casa ratio stood at 75.3 percent, while the loan-to-deposit ratio was at 79.7 percent.

“Lower income from securities trading, trust and investment management and assets sales contributed to a 6.9-percent year-on-year decline in total non-interest income from P11.82 billion in the first semester 2017 to P11.01 billion in the first semester 2018,” BPI said.

The bank registered higher revenues from credit card fees and rental income. 

Provision for loan losses in the first semester 2018 amounted to P1.91 billion, or 22.2 percent lower than 2017’s first half. 

“The lower provisioning level is based on the bank’s expected credit loss models under PFRS9 [Philippine Financial Reporting Standard 9] which showed relatively benign increases in potential impairment losses,” it said.

Non-performing loans ratio increased slightly from 1.72 percent in March to 1.80 percent in June, with a reserve cover ratio of 97.1 percent at the end of the first semester.

Operating expenses surged 16.3 percent to P21.22 billion, on accelerated spending on manpower, premises, and technology. 

This is to support the bank’s continued implementation of its digitalization strategy and its commitment to serve the self-employed micro-entrepreneurs by expanding the network of BPI Direct BanKo branches. 



...nice news

BPI sees double-digit loan increase in 2019 as it boosts retail business

BANK OF THE Philippine Islands (BPI) expects double-digit loan growth next year amid improving economic conditions as it continues to expand its retail lending business.

In a media luncheon on Thursday, BPI President and Chief Executive Officer Cezar P. Consing said its loan growth for 2019 is expected to be “in the teens” given that the economy “continues to grow the same way it has been growing.”

“It may not be the same pace of the last four, five years, but it will still be a healthy growth,” Mr. Consing told reporters yesterday.

He added that the Ayala-led bank can now be “more optimistic” given that price increases should “begin to taper off.”

“I think…the combination of oil prices having come down and with the interventions done by the government on the food side, the inflationary pressures are probably less, so inflation should begin to taper off,” he said.

“And if inflation begins to taper off, the pressure to raise interest rates will subside a little bit and I think that it might be better for the economy as a whole.”

Inflation stood at 6.7% in October, matching the previous month’s print which was a nine-year high. Month-on-month inflation likewise eased to 0.3% from 0.9% posted in September.

The central bank has raised its policy rates by 175 bps after five straight hikes to quell inflation expectations as prices of basic goods and services surged beyond the 2-4% target for 2018.

As BPI is looking at booking “healthy” loan growth next year, Mr. Consing said the bank wants to continue expanding its consumer business to hit 35% of its total loan book.

To achieve this, the official said BPI should “grow [its] consumer loans faster than the corporate segment every year. So over time, the share of the corporate comes down.”

Currently, BPI’s retail loans make up 20% of its total lending portfolio, while the corporate segment is at 80%.

Earlier this month, the lender raised P25 billion via its peso-denominated bond offer, higher than the initial guidance of P5 billion and the P15 billion announced previously. Proceeds of the fundraising activity will be used to support its expansion plans and diversify funding sources.

The Ayala-led bank reported a P5.98-billion net profit in the third quarter on the back of the double-digit expansion of its net interest income.




BPI looking to put up 20-30 branches annually

BANK OF THE Philippine Islands (BPI) expects to grow its branch network by 20-30 per year as it ramps up spending on enhancing information technology.

BPI President and Chief Executive Officer Cezar P. Consing said the Ayala-led lender is looking at growing its branch network by 20-30 offices annually.

He added that the bank eyes to grow its physical presence modestly as it “makes more sense” to develop and enhance its digital channels.

“Long term, what makes sense for BPI is [going] digital,” Mr. Consing said last week.

“My concern is if we continue to build branches, maybe a hundred branches a year and all of a sudden the digital capability and penetration is so high, we’ll have to reduce our branches.”

To support its digital push, the bank is allotting 6-7% of its revenues to IT, with a huge chunk is allotted for building up cybersecurity.

In five or six years’ time, Mr. Consing said the local banking sector will reach a “tipping point” where banks will have to reduce the number of their branches as more people use digital channels.

“What makes the difference is the cost of smartphones. The moment the cost of smartphones come down to a certain level, all of a sudden, you (clients) can have digital access,” he said. “There will come a time, maybe five or six years from now, where it will be mostly digital and you can reduce your branch size.”

However, banks’ physical presence will not become obsolete, Mr. Consing said, as central bank regulations still require clients to physically show up and submit forms.

“That’s why you still need branches. A lot of KYCs (know your customer) still require physical presence. I think it’s a question of balance.”

Amid its digital spending push, the Ayala-led lender said it will continue to put up more branches through its microfinance lending arm BPI Direct BanKo to support small businesses.

“If you notice, our big branch rollout is in BanKo. But for the main bank and for the [BPI] Family [Savings] Bank, we’re talking 20-30 branches a year,” Mr. Consing said.

In a previous interview with reporters, BanKo President Jerome B. Minglana said the microfinance arm eyes to open another 100 branches by next year to end 2019 with 300 branches as it aims to increase its presence in Mindanao.

BPI reported a P5.98-billion net profit in the third quarter on the back of the double-digit expansion of its net interest income.


ang laki ng ibinagsak ah, san kaya maganda bumili, sa 88?

...RCBC MBT BPI BDO takes a hit 

Stocks fall as banks take hit from Hanjin default

SHARES fell on the last trading day of the week as investors turned cautious on the banking sector after news of Korean firm Hanjin’s $412-million loan default from five of the country’s largest banks.

The 30-company Philippine Stock Exchange index (PSEi) fell 1.01% or 81.14 points to close at 7,904.09 on Friday. The broader all shares-index also slumped 0.72% or 34.76 points to end the week at 4,730.15.

“The index dropped 81.14 points today to close at 7,904.09, but even fell by as much as 129 points intraday, dragged down by the Hanjin debt issue which plagued the banking sector,” Papa Securities Corp. Sales Associate Gabriel Jose F. Perez said in an email on Friday.

Upon Hanjin Heavy Industries and Construction Philippines’s declaration of bankruptcy earlier this week, Rizal Commercial Banking Corp. (RCBC), Land Bank of the Philippines (LANDBANK), Metropolitan Bank & Trust Co. (Metrobank), Bank of the Philippine Islands (BPI), and BDO Unibank, Inc. were reported to have a $412-million dollar loan exposure to the firm.

RCBC, which was found to have the largest loan exposure at $140 million, saw its shares drop by 9.12% to P26.40 apiece.

Metrobank was the biggest loser in the list of 20 most actively traded shares for the day, losing 4.82% to P77.95 each. BPI followed with a drop of 4.76% to P90 apiece. Mr. Perez noted that the stocks posted the top net foreign outflows for the day at P406 million and P100 million, respectively. Meanwhile, shares in BDO were unchanged at P131.30 each.

Regina Capital Development Corp. Managing Director Luis A. Limlingan also attributed the market’s decline to the Hanjin issue, noting that this preventing the PSEi from rising past the 8,000 level.

“Philippine investors took money out as the index neared the 8,000 level. Some obvious headwinds preventing us from cracking well past 8,000 — financials getting hit as five of the largest PH banks are firefighting the biggest corporate default in the country’s history,” Mr. Limlingan said in a mobile message.

The industrials counter was the lone advancer on Friday, gaining 0.1% or 11.73 points to 11,486.68. The rest declined, led by financials which plunged 2.53% or 46.1 points to 1,772.32. Property dropped 1.15% or 46.12 points to 3,944.12; holding firms shed 0.59% or 47.04 points to 7,883.57; mining and oil slipped 0.53% or 47.14 points to 8,742.18; and services went down 0.18% or 2.92 points to 1,542.15.

Foreign investors maintained their net buying position, although at a much lower figure of P228.9 million compared to Thursday’s P1.5 billion.

Some 5.49 billion issues switched hands, resulting in a turnover of P8.5 billion, lower than the previous session’s P10.11 billion.



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