PNB looking to tap debt market anew to meet investor demand
PHILIPPINE NATIONAL Bank (PNB) is looking into entering the dollar debt market early next year, as it sees healthy investor demand for foreign currency loans amid the government’s thrust to ramp up infrastructure spending.
“We continue to look into the possibility of issuing a dollardenominated debt instrument but we keep on sliding it because it doesn’t make sense at this time to launch a debt wherein we are given only to deploy the asset that will give a negative yield,” PNB Executive Vice- President and Head of Treasury Horacio E. Cebrero III said in a media briefing on Tuesday after the bank’s annual stockholders’ meeting.
He however noted that with the government’s so-called golden age of infrastructure, “we do anticipate that there would be more demand for dollar loans. Therefore, we keep it alive — the possibility of dollar debt issuance in the coming year or even early next year.”
President Rodrigo R. Duterte’s administration is looking to hike spending on infrastructure projects to an equivalent of 7.1% of the country’s total gross domestic product (GDP) by 2022 as it aims to spur the economy to grow between 7-8% over the same period from 6.5-7.5% currently.
On the local front, the bank is also keen to continue issuing peso-denominated debt after the lender announced yesterday that it was able to successfully raise more than the programmed P3 billion from its second tranche of long term certificates of time deposits (LTNCDs).
“We’ll continue to issue LTNCDs as we see fit because there’s still a lot of liquidity in the market and it’s part of the ongoing continuous liability management of the bank,” Mr. Cebrero said.
“We are doing this both for the peso books and the dollar books [and] to meet the demand of the investors,” he added.
PNB announced to the local bourse earlier this month that they will be selling anew P3 billion worth of LTNCDs that will mature on Oct. 27, 2022 with an indicative annual interest rate of 3.75%.
LTNCDs, like the regular time deposits, offer higher interest rates. Unlike time deposits, however, LTNCDs cannot be pre-terminated. They are called “negotiable” because they can be sold at the secondary market.
The lender raised P5.38 billion from its first LTNCD tranche during a public offer conducted last Nov. 14-25, 2016, well above its planned P3 billion for that exercise.
PNB had said that proceeds from its LTNCD offerings will be used to extend the maturity profile of the bank’s liabilities as part of overall liability management and raise long-term funds for general corporate purposes.
DOUBLE-DIGIT GROWTH
Meanwhile, asked if the bank sees continued double-digit growth in its bottom line for 2017, PNB Executive Vice-President and Chief Financial Officer Nelson C. Reyes said, “Yes, we do expect to sustain a double-digit growth this year and that will be achieved on a combination of growing our core income especially lending and fee income.”
The listed lender saw its net income reach P7.2 billion by end2016, 14% higher than 2015’s P6.3 billion, primarily on the back of the continued improvement of the bank’s earnings from its core business.
“There will be opportunities in trading, but then again, as we all
know, there are external factors which will not allow us to take advantage of that,” Mr. Reyes said.
Mr. Reyes also noted that the bank is also keen on disposing or reducing its real and other properties acquired (ROPA) portfolio, currently at around P11 billion, down from P22 billion three years ago.
The bank also plans to add 10 new branches this year, with these branches concentrated more in Bonifacio Global City in Taguig and Davao.
PNB also said it will deploy around 500 automated teller machines this 2017.
Asked how much each branch would cost the bank, Mr. Reyes said, “More often the cost per branch is around P5 million excluding license. License in Metro Manila is P20 million” while branch license in provincial areas costs around P200,000 to P500,000.
For this year, PNB has set P3.5 billion in total capital expenditures, of which 50% or P1.7 billion will be used for information technology-related projects and 25% for branch expansion.
As for its thrift lending arm, PNB Savings Bank President Jovencio B. Hernandez said they are eyeing to end the year with at least 70-75 branches on top of its current 52 branches.
“We will take advantage of the new pronouncement of the Bangko Sentral [ng Pilipinas] in terms of looking at small footprint branches. We are experimenting with 50-70 square meter branches already as we anticipate the move of the consumer and the banking industry towards digitization in the next five to 10 years,” Mr. Hernandez said.
Shares in PNB gained P1.50 or 2.41% to end at P63.65 apiece on Tuesday.