East West Bank plans return to capital mart

Gotianun-led East West Bank plans to return to the capital market to fund the bank’s rapid growth as part of a program to build up capital to P50 billion in the next two to three years from around P35 billion at present.

“It’s highly likely that East West will have to increase capital because their growth has been quite robust,” Josephine Gotianun-Yap, president of FDC which is the parent conglomerate of East West, told reporters after FDC’s annual stockholders meeting last Friday.

“It’s all related to the economic outlook. If the economy continues to progress, there’s room for growth and we hope to participate in that,” said East West and FDC chair Jonathan Gotianun.

Antonio Moncupa, East West vice chair, said: “Our architectural infrastructure has been designed to be a bigger bank.”

Moncupa said if East West were to be build a branch network of 500 from 445 at present and target average of P1 billion resources per branch, this would suggest that the bank’s resources should grow to P400 billion to P500 billion.

This is seen to require P50 billion in capital to maintain a 10 percent capital adequacy ratio. “But we won’t do this in one year,” Moncupa said.

The P15-billion proposed expansion in capital, he said, could be covered by a combination of retained earnings and by tapping the capital market “one last time.”

The fresh capital-raising will be in the form of stock rights offering or sale of new shares to existing shareholders, Moncupa said. It’s possible that this may happen within this year, he said.

In the last three years, Moncupa said it had grown its loan book by 20 percent growth. “And we see no reason why we should break that tradition,” he said.

East West currently has a balance sheet of close to P300 billion.

Asked whether the bank was open to getting foreign strategic investors, Moncupa said: “The bank just like any responsible institution, will have to consider all possibility that’s good for stakeholders.”

“We’re always evaluating options,” Gotianun said.

The bank is also open to grow through further acquisitions.

Last year, East West Bank grew its profit last year by 70 percent to P3.4 billion on higher earnings from core lending activities. This year, the bank expects to grow its net profit by around 20 percent to around P4.1 billion.