BPI to sell P3-B bad loans in Q1

Bank of the Philippine Islands (BPI), the nation’s second-biggest lender by assets, plans to sell P3 billion of bad loans this quarter to help bring its bad-loans ratio below five percent next year.

The bank is in talks with at least three potential buyers of the loans, its president and CEO Aurelio Montinola told reporters yesterday. The bank has P18 billion of bad loans, equivalent to six percent of total credit, he said.

The bank, which bought smaller rival Prudential Bank in 2005, is "looking at" buying more lenders. BPI is poised to lose its No. 2 ranking when Banco de Oro completes its acquisition of Equitable PCI Bank.

BPI is also planning to expand its loan portfolio by six to eight percent this year, coming off a strong lending performance last year especially in the consumer and small and medium enterprise (SME) market.

Montinola said the bank also realized positive collections of its outstanding loans as well as the continued disposal of some of its non-performing assets (NPAs).

He, however, clarified that disposing of foreclosed properties this year will be harder to do as prices have appreciated to the point that what was once offered for a 20- to 40-percent discount last year could almost be sold at appraised valve today.

"We may have to hold on to some of our foreclosed properties," he said, adding that they are optimistic in hitting all 2006 performance targets.

Meanwhile, the operation of its overseas branches are expected to contribute significantly this year. It is in fact awaiting the nod of regulators in the United Kingdom for the operation of its London branch.

Remittances from overseas Filipino workers (OFWs) and migrant Filipinos will make considerable contributions for the foreign branch operations aside from transactions from businesses based in the Philippines and the United Kingdom.

Total resources as of end-September 2006 stood at P529.3 billion. Deposits increased by P4 billion as demand deposits and time deposits increased by P2.5 billion and P6.3 billion, respectively. – Ted Torres