Yao thrift bank plans to expand network to 100

Thrift bank Philippine Business Bank, the first local company to go public this year, plans to expand its branch network to 100 by yearend to boost its capability to reach out to its target market: small and medium enterprises (SMEs).

Based on the bank’s preliminary prospectus, PBB also plans to evaluate prospects for raising hybrid tier 1 or tier 2 capital in the next few years.

“With current CAR (capital adequacy ratio) and the CAR improvements arising from the proceeds of the offer, the bank is well positioned to raise new capital for further expansion,” the prospectus said.

During PBB’s investor briefing on Friday for its initial public offering, PBB chairman emeritus Alfredo Yao said the bank had grown assets and return on equity in excess of 20 percent each year during the last five years.

PBB president Roland Avante said the bank would work to sustain this growth trajectory.

Part of the bank’s strategy is to expand branch network to increase its presence throughout the country as well as expand the range of banking products and services that selected branches will offer.

The bank has 79 branches across the country.

“In the next three to five years, we’ll deliver 15 to 20 branches each year. We go where the SMEs are,” Avante said in an interview after Friday’s briefing.

Based on PBB’s prospectus, the bank aims to expand its presence in all major commercial and industrial areas, particularly those areas showing rapid growth of SMEs and entrepreneurial activity.

In particular, PBB has focused its branch expansion efforts in areas such as Caloocan, Malabon, Navotas, Valenzuela, Quezon City as well as highly urbanized cities outside Metro Manila such as Cebu, Davao and Bacolod.

Aside from fulfilling existing branch licenses, the bank also plans to acquire from the Bangko Sentral ng Pilipinas additional branch licenses in targeted areas.

In addition to the increase in the number of PBB’s branches, the bank also intends to expand the range of products and services that it will offer.

While PBB aims to realign asset allocation to allow loan and interest income growth, the prospectus also suggests that the bank would continue to rely on its treasury and securities trading operations to ensure liquidity and improve capital utilization during periods of low loan demand and/or excess liquidity.

The bank also announced plans to increase its portfolio of consumer loans, including vehicle financing, housing, salary and other loan products.

It also intends to exploit its position among SMEs and its presence in communities to market its consumer banking services and products.

PBB, the banking arm of the Zest-O group of businessman Alfredo Yao, is set to offer by next month up to 101.33 million primary common shares for as much as P41.94 per share. This will bring to public hands about 30 percent of the bank’s post-IPO capital.

The offer price is set to be finalized by Feb. 4 while the offer period will run from Feb. 6 to 12. Tentative listing date of the bank’s shares under the ticker “PBB” is on Feb. 19.

The joint lead underwriters for the issuance are First Metro Investment Corp. and SB Capital Investment Corp. The financial advisor and issue manager is Asian Alliance Investment Corp.

Proceeds from the offering will be used to finance the bank’s lending activities and fund the acquisition of investment securities. In addition, about P400 million will cover capital expenditure requirements in connection with its branch network expansion program, including the acquisition of new branch banking licenses, the development and implementation of information technology infrastructure and applications projects.