Landbank seeks AMC partner for its bad loans

The Land Bank of the Philippines is considering four foreign firms and a local company as possible equity partner or partners in an asset management company (AMC) that will be formed to liquidate its non-performing loans (NPLs).

As of September this year, the bank’s NPL ratio stood at 25.1 percent, way above the industry average estimated at a little over 18.03 percent. In terms of absolute amount, Landbank has over P20 billion in what are considered NPLs on bad loans.

"We hope to bring it down to industry average or better after serious monitoring, and after certain conditions have changed. It is however, lower than last year’s NPLs," LBP president and chief executive officer Margarito B. Teves said.

The bank has formed a committee handling the problem. But Teves admitted that it would be more economical and practical to get a strategic equity partner as AMC that will liquidate its bad loans.

He said they have been holding discussions with some companies although he did not identify anyone of them.

Meanwhile, Teves said he believes the bank can still meet its P1.5-billion net income target for 2001. Net income for 2000 was P509 million.

"The economic situation remains fragile but we are confident that we could meet this year’s target and even next year’s proposed targets," Teves said.

The bank had noted improvements in overall revenues from increased contributions in investments and earnings from priority sectors including local government units (LGUs), small and medium enterprises (SMEs), farmers, housing and other industrial and commercial loans.

Investment income reached P5.2 billion while net investment portfolio amounted to P65.3 billion as of Sept. 2001. The bank’s planned investment portfolio this year is P103 billion or 48 percent higher than the end-2000 level of P69 billion.

"The increment in the investment portfolio will be mainly in government securities, and sustained expansion in deposits but softening in over-all loan portfolio will lead to higher investments," Teves said.

Landbank’s lending activity is biased in favor of the commercial and industrial markets which make up a combined 70 percent of its loan portfolio. The target is to reduce this gradually while increasing the agri-based portfolio to 60 percent by 2004.

For the first nine months of this year, Landbank reported a net income of P1.1-billion from gross revenues of P14.9 billion.