BDO raises P60-B from stock rights offer on strong demand


BDO Unibank Inc. successfully concluded its P60-billion stock rights offer on Tuesday amid strong demand—making it the largest-ever share sale in the country—and listed the shares on the Philippine Stock Exchange (PSE).

BDO President and Chief Executive Officer Nestor Tan said the rights offer was a milestone for the bank as it attracted strong demand despite challenging global market conditions.

Tan said the P59.75-billion net proceeds after listing-related fees and taxes will be used to support BDO’s loan business over the next three to five years.

As mentioned in the offer’s prospectus, Tan said BDO expects to hit a net income of P26 billion for 2016 on the back of its strong lending business. This guidance compares to the P25 billion profits it made in 2015.

BDO expects its loan business to grow by around 15 percent this year. The bank is also confident that it will withstand any jitters coming from global uncertainties and rate hikes in the US expected this year given its strong balance sheet.

“The uncertainties sort of subsided [versus 2016]. We’re seeing more investments particularly outside of NCR [National Capital Region]. And there is liquidity more on the domestic side. Our confidence is seen at the amount of our issue [at P60 billion],” Tan said.

After the stock rights offer, BDO’s capital adequacy ratio (CAR) is now at 15.7 percent, higher than the 12.9 percent as of end-September 2016 and well above the 10 percent minimum requirement under the Basel III framework.

Tan said the bank is planning to open 50 to 70 branches this year, mostly outside the NCR. He said there is a resurgence of economic activities which is leading to urbanization in areas outside NCR, driven by overseas Filipino workers’ (OFW) remittances and the business process outsourcing (BPO) sector.

“We revolve around provincial expansion, to have better penetration in the consumer sector,” Tan said.
Meanwhile, Tan expects the lending industry to continue to thrive in 2017 given banks’ increased assets.

Through the stock rights offer, BDO sold 716.4 million rights shares at P83.76 each. Sixty percent of the issue was subscribed by domestic investors and 40 percent by foreign investors.

Credit Suisse, UBS and BDO Capital served as joint global coordinators, together with Citigroup, Goldman Sachs and HSBC, which acted as joint bookrunners. BDO Capital & Investment Corp. was the issue manager and domestic underwriter for the offer.

BDO has the largest banking network in the Philippines, with more than 1,100 operating branches and over 3,500 ATMs nationwide. The bank is under the SM Group’s umbrella conglomerate SMIC, which also has business interests in retail (SM Retail Inc.) and property (SM Prime Holdings Inc.).


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