BDO lists P60-B worth of new shares
The country’s leading lender Banco de Oro Unibank on Tuesday listed P60 billion new shares on the Philippine Stock Exchange, completing a landmark capital-raising exercise that seeks to further scale up its lending.
As about prospects for 2017, BDO president Nestor Tan said the bank was “always hopeful but our capital-raising is indicative of our outlook. The size is indicative of the activity we’re prepared to make.”
The stock rights offering completed by BDO represented the biggest ever common equity capital raised from the Philippine market and executed amid challenging global market conditions. The bank issued 716.4 million rights shares at P83.75 each.
Initially, Tan said BDO’s return on equity (ROE) would fare “initially poorly” because of the increase in equity base. “But hopefully, it will be short-lived. I would say three years but it depends on the economic conditions.”
Once BDO is able to disburse the additional equity into earning assets, BDO expects to normalize ROE levels at mid-teen levels.
In the first nine months of 2016, the bank’s ROE stood at 12.4 percent. In full-year 2015, ROE was 13.4 percent.
One key challenge that Tan sees for the banking system this year is the very liquid financial market: “It is positive to a certain extent, but in the meantime, while we’re all waiting for assets to fund, it creates competitive pressure on spreads.”
The low-interest-rate environment seen in the last three years is also a challenge for the banking industry. “I think we need to see that normalize,” he said.
“The very warm reception to this transaction, which is one of the biggest offerings in the history of the Philippine market, is a testament to the confidence of investors in BDO, in our stock market and the Philippine economy,” PSE chair Jose T. Pardo said in his speech during the bell ringing ceremony.
The offer saw strong participation from the bank’s domestic and international investors. It was fully subscribed and led by major shareholder SM Group.
Credit Suisse, UBS and BDO Capital served as joint global coordinators while Citigroup, Goldman Sachs and HSBC acted as joint bookrunners. BDO Capital and Investment Corp. served as issue manager and domestic underwriter.
The offer increased BDO’s common equity tier 1 capital, making the bank better positioned to fulfill its medium-term growth objectives and take advantage of the positive outlook on the Philippine economy.
