Citystate Savings gains P1

The streak of successful initial public offerings (IPOs) continued yesterday as investors warmly welcomed Citystate Savings Bank Inc. (CSB) at the Philippine Stock Exchange (PSE).

Shares of CSB, the first issue to be listed at the PSE this year, opened strong at P12.25 and closed at P12.50, or nearly P1 higher from its IPO price of P11.55 per share.

CSB listed a total of 44.1 million shares representing its total issued and outstanding capital stock, with a par value of P10 each. The shares it offered through the IPO totaled 11.1 million or 25.17 percent of its capital base.

Despite the overall weakness of the stock market, recent IPOs have been stringing up successful debuts upon listing, starting in late 2000 with the Lorenzo-owned Macondray Plastics and Pancake House and last year’s SQL* Wizard, Primex Corp. and Federal Chemicals Inc.

Stock market officials expressed confidence that the entry of CSB would provide a sounder basis for the growing optimism about the capital market and the economy in general.

"It can be considered that banking shares are a proxy to the economy; in other words, their performance reflect the fortune of the economy," PSE chairman Felipe Yap said.

For his part, newly-appointed PSE president Ernest Leung said he was impressed with the vision of CSB in providing microfinancing that bridges the gap between those served by the commercial banks and those by the lending investors or financing companies.

He also cited that despite its size, CSB probably has one of the lowest non-performing loan ratios in the entire banking industry at two percent, which indicates prudent lending practice and lower incidence of loan default among borrowers. It is estimated that NPLs comprise approximately 15 percent of Philippine banks’ total loan portfolio as of end-2000.

CSB president Alfred Cabangon said they would strengthen their microfinancing thrust in the coming years to help small entrepreneurs and to develop a strong middle market.

He also cited their Singaporean partners, real estate and insurance firm Citystate Holdings Pte. Ltd., as a major factor in their bold decision to undertake an IPO "at this time when the stock market is not exactly in good condition."

"The Singaporean investors have signaled their continuing confidence in the Philippine economy and its recovery by giving their full backing to the IPO," he said.

Only on its fourth year of operation, CSB is the first savings bank to be fully automated with some of its systems using an online deposit and signature verification process. It now has 12 branches, including its head office along Shaw Boulevard in Pasig.

Part of the estimated net IPO proceeds of P112 million will be used for the expansion of its branch network by two additional branches this year while the rest will be channeled to expenditures on automation, loans and investments in bonds, and investments in allied and non-allied undertakings to include its pawnshop subsidiary Citystate Filipinas Pawnshop Inc.