Thrift bank shares up on listing debut

Shares of Philippine Business Bank rose by 15.39 percent  on the thrift bank’s stock trading debut Tuesday, riding on a buoyant equities market and upbeat prospects for the bank.

PBB, the first company to go public this year, closed Tuesday at  P36.35 from the initial public offering price of P31.50. The IPO was priced at about 1.36 times the bank’s expected book value for 2013, giving upside to investors. For 2012, most of its local banking peers traded at about 1.6 to 1.8 times book value.

“I think the market is primed for the IPO,” PBB president Roland Avante said in a press briefing after the bank’s stock market listing.

Of the P3.2 billion in proceeds from the primary shares offer, about P400 million would be used for branch expansion and upgrading IT systems while the rest would augment lending to small and medium enterprises (SMEs).

Jojo Dispo, president of First Metro Investment Corp. (one of the arrangers of the offering), said that as the IPO was priced generously, it was oversubscribed by about four times the original offer.

“We could have priced this higher,” he said, but noted that the bank’s controlling stockholder and chair emeritus Alfredo Yao agreed to a “generous” pricing.

PBB is expected to end the year with about 100 branches, with 15 new ones opening this year in locations strategically targeting SMEs. This year, the bank was expecting to grow its loan book by 25 percent, Avante said.

Asked whether PBB was looking at prospective acquisitions, Yao said his bank was “looking forward” to expansion opportunities beyond organic growth, adding this was part of the reason why it conducted an IPO.

This capital-raising has boosted PBB’s capital adequacy ratio to 28 percent from 22 percent. “The whole move is preparatory to getting bigger and expanding,” Avante said.

As of Tuesday’s close, PBB had a market capitalization of P10.81 billion.  After completing the IPO, about 29 percent of its shares are now held and traded by the public.

The bank spends about P0.45 to P0.50 to earn every peso. “We’re very conscious about the cost to operate,” Avante said.  This favorable 45-50 percent cost-to-income ratio, said SB Capital’s Eduardo Olbes, was among the bank’s key strengths, noting this was more efficient compared to the high 50-percent ratios for many of the country’s big banks.  Doris C. Dumlao