Bank of Commerce beefs up lending portfolio

MANILA, Philippines — The banking arm of diversified conglomerate San Miguel Corp. (SMC) is beefing up its lending portfolio by an additional close to P1 billion starting this quarter.

In a disclosure to the Philippine Stock Exchange (PSE), Bank of Commerce  said its board of directors approved on Oct. 25 the reallocation of the remaining proceeds from its initial public offering (IPO) amounting to P940 million for lending activities beginning the fourth quarter.

Under the original plan, the amount was supposed to bankroll the capital expenditure requirements of the bank’s information technology (IT).

According to the listed bank, its board of directors revisited the planned use of the remaining amount as revenues from its regular banking operations could already finance IT investments.

“Negotiations with IT vendors indicate that the payment scheme for IT investments will stretch over multiple years, and with the significant increase in Bank of Commerce’s profit run rate over the past year, IT investments can already be fully funded by revenues from its regular banking operations,” the bank said.

The country’s 13th largest bank in terms of assets with P207.57 billion as of end- June said it has already utilized more than 70 percent of its P3.37-billion proceeds from its IPO for loans and securities purchases.

Bank of Commerce booked a net income of P886.91 million for the first semester of the year, 2.91 times compared to the P304.37 million recorded in the same period last year, on the back of higher net interest income as well as service charges, fees, and commissions.

For the second quarter alone, the earnings of the listed bank jumped by 46 percent to P526.32 million from P360.59 million in the same quarter last year.

“The surge was mainly spearheaded by growth in the bank’s core business,” the bank said in a statement.

During the period, the SMC-led bank said its gross income grew by 22.95 percent to P3.67 billion from a year-ago level of P2.98 billion. Amid the rise in its loan portfolio, the bank’s non-performing loan (NPL) ratio improved to 2.63 percent in end-June from 3.09 percent in December, lower than the 3.9 percent industry average.

As of end-June, Bank of Commerce has a network of 140 branches and 254 ATMs nationwide.

It recently raised P7.5 billion, more than double the original size of P3 billion, in its first foray into the domestic debt market as institutional and retail investors swarmed its peso bond offering.