PBB scanning horizon for more acquisitions

MANILA, Philippines–Philippines Business Bank plans to sustain its aggressive branch expansion program this 2015 while scouting for potential acquisitions to fast-track growth.

“At PBB, we will always look for ways to deliver adequate economic returns to our shareholders, and part of that strategy, along with strengthening our reach to the SME market by expanding our branch network, is to look for potential acquisitions that will accelerate the bank’s growth and coverage,” PBB president Roland Avante said in a statement Thursday.

Last year, the bank of businessman Alfredo Yao ended with a network of 116 branches, 16 percent higher than that of 2013. The bank plans to make full use of unutilized branch licenses to increase coverage of the SME (small and medium enterprise) market.

In a phone interview, Avante said PBB had 19 unused licenses which it would deploy this year, bringing the total network to 135. Also, PBB would open more branches, allowing the bank to end the year with more than 135 branches.

“The bank’s long-standing relationships with small-to-medium enterprises underpin our resolve to continue with the branch network expansion program. While industry conditions have been much tougher in 2014 than in previous years due to the volatility in the treasury market, the bank remains committed to reaching out to the SMEs and establishing our presence nationwide,” he said.

The bank’s branch network expansion has significantly contributed to the growth of the bank’s risk assets, a major strategic initiative highlighted by Avante when the bank was planning its initial public offering early in 2013.

“When I met with investors while doing our IPO (initial public offering) road shows and company briefings, I promised to steadily grow the bank’s balance sheet to further improve our net interest differential business while supplementing it with trading gains. So far, we have significantly increased our presence in key strategic locations in the countryside where SMEs are operating, and the bank has steadily built the logistical support of late,” Avante added.

PBB’s core income, which does not count earnings from trading, has more than doubled to P704.9 million in the first nine months of 2014 from P332.6 million in the same period of 2013. The company’s core business of lending and deposit taking has made up for the slack in the treasury business, the bank reported.

The bank’s loans and receivables increased by 26 percent year-on-year to P35.6 billion during the period.

“The bank’s earnings have taken on a higher quality as our core income continues to develop. Our performance in 2014, in light of the challenges associated with a bank that used to derive a huge component of its earnings from trading, has been satisfactory. We believe that the bank’s earnings, now that it is primarily sourced from the traditional lending and deposit-taking business, has become more consistent and valuable,” Avante said.

According to Dave Sison, PBB’s head of corporate planning and investor relations, investors prefer assets that have recurring cash flows and high-quality earnings.

“With the continuing expansion of PBB’s branch network and the anticipated growth in interest-earning assets, the bank has shown that it can generate substantial recurring business by serving the needs of its key clientele,” Sison added.