PSBank plans P3-B tier2 offer, sees P2-B net profit

MANILA, Philippines—Philippine Savings Bank, the thrift bank arm of the Metrobank group, is raising P3 billion from the sale of debt notes qualifying as tier 2 or supplementary capital early next year in order to boost its cash hoard for potential acquisitions.

In a press briefing on Friday, PSBank president Pascual Garcia III also said the bank would likely end this year with record-high P2 billion in net profits despite a weaker-than-expected demand for consumer loans. For next year, PSBank is projecting net profits to grow by a modest 10 percent to P2.2 billion.

PSBank, which now has a 200-branch network, opens around 20 additional branches each year but is also considering expansion outside of organic growth.

“We’re doing a tier 2 exercise to get additional capital. This is for prepping up … we’re putting ourselves in a position to acquire,” Garcia said.

Although the bank was not about to sign any buyout deal at this time, Garcia said it’s on the lookout for opportunities. It’s undertaking an early fund-raising to avoid scrambling for funds when the need arises, he said.

The thrift bank has mandated Dutch financial giant ING to arrange the tier 2 offering, targeted by January or February next year.

The tier 2 notes will have a tenor of 10 years with an option for the bank to redeem at the fifth year, or otherwise pay higher interest rate.

For 2012, Garcia said the domestic economy could still grow by 4.5-5 percent–better than recent forecasts made by foreign institutions–because government would then have the leeway to step up spending and counter the impact of a global slowdown. Nevertheless, he said external headwinds would still be there to influence domestic output.

“I look to the government sector to be more active next year. That will help counter the effect of external shocks in the local economy,” he said.

Garcia personally thinks that monetary authorities would likewise help by easing key interest rates by 25 basis points by the first quarter of 2012.