PBCom aims to raise up to P5B via long-term deposit notes issuance

Retail magnate Lucio Co-led Philippine Bank of Communications has joined the bandwagon of banks locking in long-term funding by offering high-yielding deposit notes.

In a disclosure to the Philippine Stock Exchange yesterday, PBCOM said its executive committee had approved the filing of an application to raise as much as P5 billion from an offering of long-term negotiable certificates of deposit (LTNCDs).

The issuance, which will be done in one or more tranches, is subject to the approval of the Bangko Sentral ng Pilipinas.

In the disclosure, PBCOM said the proceeds of the planned issuance would be used by the bank for “general corporate funding, especially long-term lending.”

LTNCDs are negotiable certificates of time deposit issued by banks. They carry higher yields compared to regular time deposits or savings accounts.

Unlike regular time deposits, LTNCDs cannot be preterminated by holders. However, investors can negotiate or transfer their holdings in the secondary market prior to maturity. Interest on LTNCDs is tax-free for individual investors if the instrument is in the name of the individual holder and is held for at least five years.

At present, PBCOM ranks 20th largest among the country’s 43 commercial and universal banks with assets of around P99 billion. It is valued by the stock market at about P9.25 billion.

In the first quarter, its consolidated net profit rose to P176.87 million from P133.74 million in the same period last year. The increase was driven by the 18-percent growth in interest income from loans and receivables.

The bank’s loan book amounted to P55.57 billion as of end-March while deposit base stood at P74.95 billion.

Capital adequacy ratio is 15.25 percent of risk assets, well above the 10-percent minimum requirement.

Return on average equity was 7.08 percent while return on average asset stood at 0.74 percent. —DORIS DUMLAO-ABADILLA