AUB to redeem P5 billion debt ahead of schedule

MANILA, Philippines — Rebisco Group’s Asia United Bank (AUB) is redeeming P5 billion in debt notes ahead of scheduled maturity to save on interest payments.

In a disclosure, AUB said it has issued a notice to noteholders exercising the early redemption offer or the unsecured subordinated tier 2 notes issued in November 2015.

The listed bank said the Bangko Sentral ng Pilipinas (BSP) has approved the early redemption of the 5.625-percent debt papers due 2025 through Monetary Board Resolution 1263 issued on Oct. 3, 2020.

“AUB shall pay the redemption amount, which shall be 100 percent of the face value of the notes plus accrued and unpaid interest to all noteholders as of book closure date,” the bank said.

The banking arm of the Rebisco Group has set the book closure date on Feb.23 followed by the redemption date on Feb. 25.

The bank issued the unsubordinated Basel 3-compliant tier-2 notes in November 2015 to strengthen its capital base and boost capital adequacy in line with the requirements of the BSP.

AUB raised P7 billion during its maiden bond offering at the Philippine Dealing and Exchange Corp. (PDEx) in November 2019, under its P30-billion bond program.

The earnings of AUB remained flat despite allocating P3 billion for probable loan losses from January to September last year due to the impact of the pandemic.

The bank’s operating income jumped  by 25 percent to P11.5 billion from January to September compared to P9.21 billion in the same period in 2019.

AUB’s net interest income went up by 17 percent to P8.1 billion from P6.9 billion, translating to a net interest margin of 4.3 percent due to loan portfolio growth.

The bank’s loan book inched up by four percent to P165.4 billion during the nine-month period from last year’s P158.6 billion, while its deposit base likewise grew by four percent to P232 billion from P223 billion.

Non-interest earnings surged by 50 percent to P3.4 billion from P2.3 billion amid better trading revenues.

The bank’s provisioning from January to September last year was more than four times the P693.07 million booked in 2019 due to economic uncertainties brought about by the pandemic.

AUB’s non-performing loan (NPL) ratio increased, but remained manageable at 2.2 percent in end September last year from 0.97 percent in end September 2019, while NPL coverage ratio declined to 96.3 percent from 109.3 percent.