Stock News 2012: BDO Keen On PNB Acquisition

Philippine National Bank (Photo credit: Wikipedia)

The SM group of companies is making a bid for the acquisition of a stake in Philippine National Bank and its possible merger with BDO Unibank Inc. as talks between PNB and Bank of the Philippine Islands remained inconclusive.

In an interview SM Investments Corporation chief finance officer Jose Sio said they are in discussions with PNB’s principal shareholder Lucio Tan for a possible investment in PNB.

“We are always interested in making investments for as long as it will help us grow,” Sio said adding that BDO chairperson Tessie Sy has a good relationship with Tan.

However, Sio laughed off market talk that BDO has offered to acquire a stake in PNB at R150 per share. “Well I heard market talk saying we offered R200 per share,” he countered. PNB last traded at R92.70 per share.

Sio said the price will have to be determined after they look into the quality of PNB’s assets although he noted that the bank has a good land bank of prime properties. The SM group is also in real estate, particularly malls and residential buildings.

Bank of the Philippine Islands and PNB have earlier asked the Philippine Stock Exchange to suspend the trading of their shares as they disclosed that their principals are in discussion for a possible merger.

However, the banks eventually asked the PSE to lift the trading suspension since no deal has been made.

It was reported that PNB may have received counter-offers from other banks since a merger between BPI and PNB may translate to market leadership, dislodging BDO as the top bank and Metrobank as the second largest lender in the country.

Analysts had said that a merger between BPI and PNB would have triggered a new wave of merger and acquisitions (M&As) in the local banking industry.

Once a merger between BDO and PNB pushes through, this would further cement BDO’s position as the country’s biggest bank.

COL Financial research head April Tan Lee noted that, in the 1990s, there was a wave of M&As after Equitable Bank merged with PCI Bank.

“I think what happened was that Metrobank bought all these banks afterwards to maintain its number one position,” Lee said adding that, “The question today is, will that trigger more consolidation from big names because they want to maintain their lead?”

http://www.mb.com.ph/articles/385912/bdo-keen-on-pnb-acquisition#.UMKFQuSmj3w

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Stock News 2012: Stumbling block to banking deal of the decade

Philippine National Bank (Photo credit: Wikipedia)

While Bank of the Philippine Islands has entered an advanced stage of negotiations to acquire a controlling stake in Philippine National Bank, the prospective banking deal of the decade seems to have encountered a major stumbling block—getting the imprimatur of taipan Lucio Tan.

The “Kapitan” may have started estate planning and chosen a successor, but all major deals of course have to get his final blessing, and from what we gather, he needs further convincing.

Some speculate it has something to do with a supposed tempting counter-offer from fellow taipan Henry Sy-led Banco de Oro Unibank, which will lose its bragging right as the country’s biggest bank if and when the deal is reached.

While a Chinoy versus Castilaloy banking edition battle does not seem far-fetched, BDO has officially denied to the Philippine Stock Exchange any plan for a PNB takeover. BDO chair Teresita Sy-Coson herself also told Biz Buzz: “We did not look at it.”

This is probably because a bidding war is not a plausible angle if the stumbling block is not the price at which PNB is to be valued. Several sources close to the Lucio Tan group said it has something to do with the issue of dilution or the deal structure, which will leave the LT group with a minority stake (20 percent) in a holding firm that will own 60 percent of an enlarged BPI.

“He doesn’t want a minority stake in any business,” one source said. Another source described it as a “withdrawal syndrome”—as the emperor loses power and influence.

Instead of something like a Digitel-PLDT deal, it seems that what Kapitan would have preferred was the Philippine Airlines-San Miguel or Fortune Tobacco-Philip Morris partnership deals wherein the LT group remained as an equal partner, only without management control. But in this case, even a merged PNB-Allied Bank entity is not an equal partner to BPI, the country’s most valuable bank.

http://business.inquirer.net/94959/biz-buzz-stumbling-block-to-banking-deal-of-the-decade

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Stock News 2012: BPI profit rises 37% to P13.2B

Philippine 100 peso bill (Photo credit: Wikipedia)

Higher interest income drove Bank of the Philippine Islands’ net income 37 percent higher to P13.2 billion in the first nine months of the year, the bank said in a disclosure to the Philippine Stock Exchange.

BPI attributed the solid performance to strong revenues, which were up 17.6 percent, coming from both net interest income and non-interest income.

Despite the prevailing low interest rate environment, net interest income was higher by 7.8 percent as the average asset base expanded by almost P50 billion or 6.4 percent.

Net interest spread was relatively flattish notwithstanding the full recognition of the non-remuneration on statutory and liquidity reserves maintained as deposits with the Bangko Sentral ng Pilipinas (BSP).

BPI also continued to fund its lending growth with low cost funds.

Non-interest income was 34 percent higher, mainly driven by higher securities trading gain.

Other income and fees and commissions also posted increases.

Operating expense went up a manageable 4.8 percent, with increments mainly on premises and technology related costs as well as other operating expenses.

Impairment losses were up 54 percent as provisions were set up for the strengthening of the actuarial reserves for the pre-need subsidiary.

For the third quarter, impairment losses were 1.2 times the previous year. Revenues were, however, up five percent, thereby resulting in a nine percent improvement in net income to P3.8 billion.

Loans reached P475 billion as the growth rate of 18 percent was sustained through the third quarter. Corporate and consumer loans continued with their double-digit momentum with 18 percent and 16 percent, respectively, on a year on year basis.

Asset quality as reflected in the net 30-day NPL ratio improved to 1.7 percent from last year’s 2.3 percent, with reserve coverage at 137.9 percent.

Deposits reached P697 billion or a 12 percent increase from last year. In addition, assets under management increased 15 percent to P760 billion.

At end-September, BPI’s market capitalization stood at P284 billion, the highest among domestic banks.

 “Normalizing the impact of the opportunistic recognition of securities trading gains, BPI’s adjusted return on equity and return on assets as of September 2012 would be 16.9 percent and 1.9 percent, respectively,” BPI president and CEO Aurelio R. Montinola III said.

http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=865169

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Stock News 2012: Ayala Corp kicks off P10-B bond offer

The bonds due 2027 bear an interest rate of 6.875 percent per annum.

Tapped as underwriters for the bond issue are BPI Capital Corp., BDO Capital & Investment Corp., First Metro Investment Corp., Hongkong and Shanghai Banking Corp., ING Bank Manila, RCBC Capital Corp., SB Capital Investment Corp. and Standard Chartered Bank.

Ayala is raising funds to support its expansion both through organic growth of its existing business lines as well as value-accretive acquisitions. This includes opportunities presented by various domestic infrastructure projects.

“We always ensure that we maintain a highly flexible funding position at the holding company level that will allow us to invest in sizable projects without impeding other value-enhancing initiatives we are currently undertaking,” Ayala treasurer Ramon Opulencia said.

“The low-interest rate environment and the robust liquidity in the system provide an ideal environment for us to be able to stretch our tenors and match the anticipated long gestation period of the investments that Ayala envisions,” he added.

Ayala earlier won the bid for the Daang Hari connector road project under the government’s Public-Private Partnership (PPP) program.

It also recently forged an agreement with Metro Pacific to jointly pursue and develop light rail transit projects in Metro Manila.

Part of the proceeds of the bond offer will also be used to prepay the company’s debt.

Ayala has been a consistent and innovative issuer in the domestic capital market over the past few years. It has pioneered investment products in the local market that provided the broader investing public, particularly retail investors, with alternative investment choices.

http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=801615

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Stock News 2012: BPI holds record P700-B assets under management

BPI Direct Savings Bank logo (Photo credit: Wikipedia)
The Bank of the Philippine Islands (BPI) has reached a record P700 billion in assets under management (AUMs) as of end January this year.

BPI Asset Management and Trust Group (BPI-AMTG), a BPI subsidiary, is the overall fund manager for BPI assets that includes managing mutual funds, unit investment trust funds (UITFs), the Odyssey funds, and other traditional trust products such as those in escrow, reserves of pre-need companies, corporate and institutional funds, pension and provident funds.

BPI Investment Management Inc. (BIMI) is a wholly-owned subsidiary of BPI, is the fund manager and principal distributor of the six ALFM mutual funds, as well as the Bahay Pari Solidaritas Fund and Ekklesia Mutual Fund.

BPI serves as investment advisor to all mutual fund managed and distributed by BIMI.

The largest portfolio is the wealth management, accounting for roughly 40 percent of total followed by the institutional accounts taking approximately 24 percent. Then, traditional trust products accounting for 22 percent, and the Odyssey funds for 14 percent.

The Peso Fixed Income Funds group ballooned to about P67.3 billion in January 2012. It is a mixed of unit investment trust fund (UITF) and mutual funds and includes the BPI Short Term Fund, BPI Premium Fund and the BPI Institutional Fund, which combined amounts to over P13 billion.

The ALFM Peso Bond Fund remains the single largest mutual fund managed by the BPI fund managers. In fact, it is also the country’s largest mutual fund, and among the more popular investment instruments for individual investors.

Also part of the huge Peso Fixed Income Funds are the Odyssey Peso Cash Management Fund, the Odyssey Peso Income Fund, the Odyssey Bond Fund and the Odyssey Tax-Exempt Peso Fixed Income Fund.

The Odyssey funds as managed by fund managers that came from the acquisition by BPI of the ING asset management group. In fact, the Odyssey funds alone amount to P92.03 billion.

Meanwhile, the Global Fixed Income Funds amount to roughly P17.8 billion. Three of the largest funds are the ALFM Dollar Bond Fund (P7.5 billion), the Odyssey Philippine Dollar Bond (P4.2 billion), and the BPI Global Philippine Fund (P3.8 billion).

Peso Equity Funds grew to approximately P24.7 billion, and the Global Equity Fund grew in the vicinity of P4.5 billion.

BPI defines mutual funds as a collective investment scheme, which pool money from a large number of shareholders and invest in a portfolio-which may include money market, bond/fixed income or equity securities.

http://www.philstar.com/Article.aspx?articleId=790300&publicationSubCategoryId=66

Stock News 2012: BPI profit up 13.4% to P12.8B

BPI Building in Makati City, at the corner of Ayala Avenue and Paseo de Roxas. (Photo credit: Wikipedia)
Ayala-owned Bank of the Philippine Islands (BPI) said its an unaudited net income reached P12.8 billion last year, up 13.4 percent from P11.3 billion in 2010.

BPI president and chief executive officer Aurelio Luis R. Montinola III said in turn, they are targeting a 13-to 15-percent expansion in its lending this year as they anticipate another double-digit growth in earnings.

“We look forward to 2012 as a better year for the country and for BPI, as we intend to continue our loan growth path and differentiate ourselves through superior relationship managers and further use online banking,” the bank official added.

“We exceeded our five million customer base goal, improved our ROA (return on assets) to 1.6 percent, and maintained ROE (return on equity) above 15 percent during our 160th anniversary.”

Total revenues grew seven percent on the back of a 10-percent expansion in net interest income. That, in turn, was fueled by the growth in average asset base to P48 billion.

“Net interest margin was not only preserved but ended higher by 13 basis points,” Montinola said.

Non-interest income was likewise three percent higher due to an increase in service charges, trust fees, income from the insurance companies and credit card income.

Operating expenses, however, increased 12 percent with almost half generated by salary-related costs. Manpower cost though remained at 48 percent of total expenses. Also adding to the operating expenses were premises costs, regulatory costs, and other variable costs.

Impairment losses were lower at P2.15 billion in view of the continuous decline in non-performing assets.

Total resources of P843 billion were slightly lower by almost four percent than the previous year’s figure of P877 billion.

Total deposits contracted by about five percent to P681 billion, while total intermediated funds reached P1.35 trillion, or a 12-percent increase, as assets under management went up 38 percent.

http://www.philstar.com/Article.aspx?articleId=772820&publicationSubCategoryId=66

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Stock News 2011: BPI earns P9.6 billion

Image via Wikipedia
The Bank of the Philippine Islands reported that its net income grew by 6 percent to P9.6 billion as it opted to expand its loan to deposit ratio to maintain its net interest margin amid market volatility.

In a disclosure to the Philippine Stock Exchange, BPI said total revenues were up by 7 percent as net interest income improved by 9 percent fuelled by a P67 billion growth in average asset base.

Non-interest income was just slightly ahead of the previous year as securities trading gain fell short by P809 million from last year as expected.

This was however more than compensated for by higher fees and commissions, income from insurance operations, and other operating income.

Operating costs were however higher by 13 percent with half of the increase arising from salary adjustments and CBA related expenses. Increases were also seen in premises cost, regulatory costs, and other variable expenses.

http://mb.com.ph/articles/339379/bpi-earns-p96-billion-6-first-nine-months

Stock News 2011: No property bubble, says BPI Family Savings

Image via Wikipedia
The BPI Family Savings Bank (BPI Family Savings) does not foresee a mortgage bubble in the Philippine property sector in the fact of strong demand for housing loan.

BPI Family Savings president Jose Teodoro Limcaoco said that demand for mortgage loans has been growing at a strong pace.

“In fact, BPI Family Savings has been making bookings of between P1.4 to P1.8 billion a month in mortgage loans,” Limcaoco said, during the formal launching of a unique financing package between the Philippine Franchising Association, the Association of Filipino Franchisers Inc. and the country’s leading thrift bank.

Majority of the borrowers are first-home buyers and ends-users with a small portion classified as speculators. That means that the borrowers will end up owning the properties and that the loans will be paid.

The bubble occurs when the majority of the buyers are speculators or individuals who acquire property or units for the purpose of re-selling. The tendency in a predominantly speculator market, is that the prices of the properties or units become too high or unrealistic.

Another reason for the optimistic outlook is the large number of reputable developers entering the housing market. “Respected developers such as Ayala Land, Robinsons Land and the SM Development Corp. are building left and right,” the bank president said.

http://www.philstar.com/Article.aspx?articleId=661762&publicationSubCategoryId=74