Chinabank raises P10.25B in huge term deposit offer

Sy family-led China Banking Corp. (Chinabank) has raised P10.25 billion in fresh funds from an offering of high-yielding deposit notes, boosting its capability to support big-ticket projects such as in the infrastructure and energy sectors.

The amount was raised from the issuance of long-term negotiable certificates of deposit (LTNCDs) due in 2024. These were priced at 4.55 percent per annum and marked the largest LTNCD issuance in the banking industry so far this year.

The offering was oversubscribed by two times the base offer, allowing Chinabank to jack up the offering from the initial size of P5 billion in a deal solely arranged by British banking giant HSBC.

The LTNCDs, the first tranche of Chinabank’s planned P20-billion LTNCD program, were listed on the Philippine Dealing & Exchange Corp. (PDEx) on Thursday.

LTNCDs are negotiable certificates of time deposits and are tax exempt for qualified individuals if held for at least five years. The LTNCDs are insured by the Philippine Deposit Insurance Corp. for up to a maximum coverage of P500,000 per depositor.

Chinabank treasurer Benedict Lee Chan told reporters that this year, the bank’s loan book would likely expand by 15 to 18 percent.

“So far, (loan) take-up in the first half is small given the fact that we’re in a rising interest rate environment. In the second half, we expect this to pick up because corporates are now in position. They know that the interest rate is going up,” Chan said, adding that corporate borrowers may want to lock up their funds before cost of borrowing rises further.

The issuance of the remaining P10 billion LTNCDs would depend on market conditions moving forward, Chan said.

With fresh funds in place, Chinabank aims to stabilize its net interest margins at around 3.5 percent amid stiff competition with other lenders.

Chinabank also plans to raise another P30 billion in the form of corporate bonds or short-term notes as early as the second half of this year. “Hopefully we’re going to issue another P10 to P15 billion on that side, depending on market conditions,” Chan said.

Patrick Cheng, Chinabank chief financial officer, said in the coming years, the bank’s loan book may grow at a slower pace of 15 percent from the 18-percent seen in the last three to four years. “There are geopolitical and other uncertainties right now so there might be a little bit of pullback,” he said.