MANILA, Philippines—Government-owned Land Bank of the Philippines hopes to raise at least P2 billion from a second offering of high-yield deposit instruments mainly for overseas Filipino workers (OFWS) in September.

Land Bank, one of the most profitable government financial institutions, meanwhile said it had also set aside P3 billion for a new housing loan program for OFWs, in which the maturity can be stretched up to 20 years while interest rate is fixed for the first 10 years.

Land Bank president Gilda Pico told reporters the bank would offer a new tranche of long-term negotiable certificates of deposits (LTNCDs) as part of continuing initiatives to provide investment alternatives for OFWs.

Land Bank had obtained central bank approval for an offering of as much as P5 billion worth of LTNCDs but its offering earlier this year generated only P630 million.

The first tranche of zero-coupon LTNCDs, sold at denominations of P20,000, has a maturity of 5.5 years and an annual yield of 7.0 percent. The second tranche will carry the same tenor.

The instruments are negotiable and can be used as collateral for bank loans or sold without effecting a change in ownership. They are covered by the Philippine Deposit Insurance Corp. at up to P250,000 per depositor.

Pico said the housing loan program for OFWs, launched last month, will be different from Land Bank’s regular housing loans because of the fixed interest rate for the first half of the loan tenor, Pico said.

She said OFW borrowers could take advantage of low interest rates in the Philippines and lock in their cost of funds.

Land Bank reported a net income of P2.56 billion in the first half of the year, up 19 percent from P2.15 billion in the same period in 2007, defying an industry-wide downturn brought about by sluggish treasury earnings.

Pico cited increased earnings from loans, investments and fee-based transactions.

She said the full-year profit target was P4.5 billion.

Total revenue in the first half went up three percent to P12.3 billion, about 60 percent of which was net interest income and the remainder from investments.

As of end-June, the bank’s total loan portfolio amounted to P129.5 billion, up by about 15 percent from a year earlier. About 69 percent of the lending went to its priority sectors: farmers and fisherfolk, micro-enterprises and small and medium-scale enterprises, livelihood loans, agribusiness, agricultural infrastructure for local government units, agriculture-related projects of government-owned or -controlled corporations, and environment-related loans.

Revenues from loans and investment rose by a modest two percent but the bank posted a 28-percent year-on-year increase in foreign exchange profits. Edited by INQUIRER.net