AUB to upgrade into a universal bank, eyes IPO in 2007

Asia United Bank (AUB) is planning to upgrade its status from a commercial bank to a universal bank to open up more opportunities for expansion, a top bank official said. 

The Bangko Sentral ng Pilipinas (BSP) is requiring banks to first obtain a universal banking license before they are allowed to venture into other non-allied activities.

At the same time, the BSP is also requiring that a universal bank must sell 10 percent of its shares through an initial public offering (IPO) three to five years after obtaining its universal banking license.

AUB senior vice president and treasurer Antonio Agcaoili Jr. said the bank could fasttrack its IPO next year once it secures the BSP approval to become a universal bank.

AUB has a total capitalization of P5.5 billion. It reported a net income of P690 million in the first 10 months of 2006, or 17 percent better than in the same period last year. The original full year income target was placed at P750 million but bank officials forecast the same to end closer to P800 to P850 million. Net income realized last year was P696 million, and P457 million.

Agcaoili said the key drivers of profit growth are the strong gains from treasury, loans, branch income and remittances. Income from treasury accounted for roughly 50 percent of income, followed by loans and earnings from branches (about 20 percent each), and a single digit contribution from remittance business.

AUB is targeting net income at a "conservative" P700 million in 2007.

"All businesses will make positive contributions with treasury experiencing slower growth due to lower interest rates," Rustico C. Nazareno Jr., AUB senior vice president, added.

Business from remittances is expected to increase its contribution to the bottom line from a little over five percent of earnings, to almost 10 percent.

This optimisim is based on the national average of 20 percent annual growth rate in remittances, plus new domestic and foreign alliances forged by the bank.