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The Banco de Oro Corporate Center on Makati Avenue in Makati City. (TMM file photo)

BDO floats P5B LTNCDs to fund expansion program

By Riza Lozada

The Sy group-led Banco de Oro Unibank Inc. (BDO) hopes to raise P5 billion through the issue of 5.5-year Long-Term Negotiable Certificates of Deposit (LTNCD) with an indicative interest of of 3.5 to 3.75 percent per annum. 

In a report to the Philippine Stock Exchange (PSE), the bank said it aims to issue the LTNCDs “to diversify the maturity of its funding sources and support business expansion plans.”

It said the bank had an option to increase the volume of issuance “depending on market feedback.”

Final coupon rate will be set before or at the end of the offer period or on Aug. 11, 2017.

The issue date is set on August 18 although the offer period may be adjusted depending on the bank’s decision.

The bank tapped Deutsche Bank AG, Manila Branch (DB) and ING Bank N. V., Manila Branch (ING) as joint lead arrangers and selling agents for the issuance while BDO and BDO private banks are the other selling agents.

The bank issued P7.5-billion worth of negotiable certificate in April 2015.

LTNCD is covered by deposit insurance under the Philippine Deposit Insurance Corporation (PDIC).

The LTNCD has denominations of as low as P100,000 while increments can be made for as low as P50,000.

BDO registered a P13.3-billion net income in the first half from P11.7 billion a year ago.

The bank traced the improvement of its bottom line to core businesses or the rise in loans, the low-cost deposits and recurring fee-based service income.

Loans went up by 17 percent to P1.6 trillion while total deposits ended nearly P2 trillion fueled by a 17 percent increase in low-cost savings and current accounts, which in turn account for 73 percent of total deposits.

With the increase in core businesses, net interest income grew 22 percent to P38.6 billion.

Non-interest income during the period reached P23.2 billion, driven by fee-based service income, which rose 13 percent.

Of the total, insurance premiums increased by 17 percent to P4.6 billion while trading and foreign exchange gains contracted by 21 percent from P3.2 billion a year ago to P2.5 billion.

Operating expenses in the first half rose 20 percent on back of the efforts to expand the bank’s core businesses and hike new investments in additional areas.

Provisioning for the period reached P2.9 billion while gross non-performing loan (NPL) ratio and NPL cover are steady at 1.3 percent and 137 percent, respectively.

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