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BANK of
the Philippine Islands (BPI), whose last acquisition was
midsized Prudential Bank in 2005, is on the lookout
again for banks to purchase.
According to BPI president Aurelio Montinola III,
competition among local lenders is heating up as profit
margins are squeezed. As a result, banks are forced to
grow big in order to remain competitive, said Montinola,
recently elected president of the Bankers Association of
the Philippines.
“We’re
on the lookout for more acquisitions. We’re known for
it. If there are opportunities, we will take a look at
it,” Montinola said in response to a shareholder’s query
during the bank’s annual stockholders’ meeting at the
InterContinental Hotel.
He also
announced the plan to expand the bank’s authorized
capital stock, the last one having been made seven years
ago, and seen to expand its common shares from 2.9
billion shares to 4.9 billion.
There
are only some 185 million unissued common shares left,
not enough to execute the increase in authorized capital
stock.
Montinola paid tribute to the fierce competition given
by Banco de Oro Universal Bank founded by Henry Sy Sr.
“We’re
quite aware of the challenge and we are responding well
internally,” he said, to ease concerns that BDO has
taken over its second lead position in asset terms.
He
rejected notions of engaging in Islamic banking locally
even though strategic partner Development Bank of
Singapore is into it.
Montinola said 2008 should prove “more challenging” but
that corporate and consumer-loan demand should continue
to grow by 12 percent.
He
reported fewer borrowers failing to pay their loans last
year as the ratio of nonperforming loans (NPLs) improved
to just 3.5 percent of portfolio, from 5.5 percent.
Montinola aims to expand the bank’s remittance business
by 22 percent this year: “There are more than 8 million
overseas Filipinos and we aim to get at least 15 percent
of that number.”
He also
said the measure of a lender’s strength is reflected in
the adequacy of its capital in relation to elements of
risk such as market, credit or operational risks and
others, and that BPI has capital adequacy ratio of 15
percent on consolidated basis.
The
international norm prescribed by the Bank for
International Settlements is only 8 percent, though the
Bangko Sentral ng Pilipinas mandates a 10-percent
adequacy ratio.
BPI has
NPLs worth some P11 billion, plus acquired or foreclosed
assets—called ROPAs—of another P20 billion.
“Our
NPLs should be down by another P5 billion this year,”
Montinola said of the planned sale of soured loans that
most banks dispose of individually or by retail, rather
than offloading them to a special purpose vehicle with
the sharp discounts they offer. |
