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Allied Banking Corp. has lowered the level of its bad loans
following the disposal of a significant amount of its nonperforming
assets in December last year, the bank announced Friday.
In a statement, the Lucio Tan-led bank said it
was able to slash its nonperforming loan ratio to 2.4 percent last
year from 13.1 percent in 2004, the lowest level it has recorded.
This was due to the sale of about P2.6 billion of NPAs to special
purpose vehicle.
About P2.4 billion of the total bad assets were
booked at NPLs and the balance were real and other properties
acquired by Allied Bank. The bank shored up P504.5 million, or 20
percent cash settlement from the sale of its NPAs while the balance
would be charged completely against existing provisions.
The bad asset disposal will also help push the
bank’s capital adequacy ratio by 100 basis points higher to reach
16 percent 18 percent from the 14.2 percent at the start of this
year after the launch of its lower Tier 2 subordinated notes in
February 18 to 26.
The notes, which are expected to bring in P3
billion, would also help the bank prepare for its merger with sister
bank, the Philippine National Bank. The 10-year debt notes would
carry a yield between 6.875 percent and 7.375 percent a year. Allied
Bank has the option to redeem these debts by 2013.
Moody’s Investor Service rated the debt notes
as “stable” while Allied Bank’s financial performance was
given a “positive” rating.
-- Likha C. Cuevas-Miel
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