THE COUNTRY’S leading lender BDO Unibank is raising P60 billion in fresh capital to support growth objectives in the following years and brace for higher capital requirements.
BDO’s board approved the increase in additional capital through the sale of new shares to existing investors, the bank disclosed to the Philippine Stock Exchange on Monday.
“The fresh capital will support the bank’s medium-term growth objectives amid the country’s favorable macroeconomic prospects, and provide a comfortable buffer over higher capital requirements with the forthcoming imposition of the domestic systemically important bank (DSIB) surcharge,” the bank said
The Bangko Sentral ng Pilipinas (BSP) has classified banks depending on the extent of their systemic importance using pre-defined indicators for size, interconnectedness, substitutability and market reliance as a financial market infrastructure as well as complexity. The DSIB framework is in line with the initiatives pursued under the globally-accepted Basel 3 reform agenda.
As of end-June, BDO said its consolidated CET1 ratio and capital adequacy ratio (CAR) of 11.3 percent and 13.1 percent, respectively, were above the current regulatory minimum levels, even with the gradual implementation of the DSIB surcharge.
The bank said the additional capital will allow it to sustain its momentum and take advantage of the country’s growth opportunities. Over the past five years, BDO’s customer loan portfolio grew at a 19 percent compounded annual growth rate (CAGR), outpacing the industry’s 17 percent CAGR.
“Going forward, the bank hopes to further expand its presence in emerging growth areas particularly the consumer, provincial middle market and SMEs (small and medium enterprises) and the underserved segments, as well as in infrastructure-related lending/project finance in line with the government’s thrust to promote countryside development and ramp up infrastructure spending,” BDO said.
Sy family-led SM Investments Corp. (SMIC), the controlling and majority shareholder of BDO, has expressed its full support for the bank’s expansion plans and the rights offer.
“SMIC commits to subscribe to its proportionate share and is willing to underwrite any shares not taken up by minority shareholders,” the disclosure said.