Banco de Oro on track for P7-B income target

Banco de Oro Unibank Inc., the product of the merger between Banco de Oro and Equitable PCIBank, is on track of achieving its P7-billion net income target this year, the bank’s top executive said.

“We are still on track,” Nestor Tan, BDO president and chief executive officer, said during an investors’ forum for the bank’s P5-billion lower Tier 2 unsecured subordinated debt issue.

The target net income is net of the P1 billion for completing phase 1 of the integration process and another P1 billion to complete the entire integration process in 2008.

Tan said the bank will be looking for more growth opportunities next year. “There are still areas that we can still exploit, and we want to expand further our loans.”

This year, BDO concentrated in cleaning its books as well as fully integrate all assets of Equitable PCI Bank which it acquired in 2006.

Next year, BDO is open for more opportunities especially with the entry of fresh capital from its debt issues.

The bank has just launched a P5-billion lower Tier 2 unsecured subordinated debt issue. The debt issue carries an interest rate of seven percent per annum in the first five years, with a step-up spread and step up rate of up to 150 percent.

Tan said the capital-raising exercise will give the bank a lot of flexibility in its expansion and integration process. It will also allow the bank to pre-fund its dollar-denominated Tier 2 issue which will mature in the middle of next year.

“We can be flexible in facing new risk conditions or new acquisitions next year,” he said.

BDO is now ranked second largest among the country’s banks in terms of assets and third in terms of deposits, loans and capital. It has a non-performing loan (NPL) ratio of 6.7 percent.