UCPB raises P4.5B from certificates of deposit

MANILA, Philippines - The United Coconut Planters Bank (UCPB) has raised P4.5 billion from the issuance of long-term negotiable certificates of deposit (LTNCD), an oversubscription of P1.5 billion from its original size of P3 billion.

UCPB executive vice president and treasurer Eulogio Catabran said favorable market conditions reinforced the strong investor demand for the bank’s maiden LTNCD issue.

“We were pleasantly surprised by the market’s overwhelming response,” he added.

The bulk of the subscription came from individual investors who have the most to gain from the investment. Individual citizens, resident aliens and non-resident aliens engaged in trade or business in the Philippines are exempt from paying the 20-percent income tax on earnings from deposits with tenors of five years or more.

The LTNCD carried a fixed rate of 6.25 percent per annum payable quarterly over the next five years and three months, or until February 2016. The rate was set at 100 basis points over the five-year benchmark rate recorded last Nov. 4. Issue arranger Citicorp Capital Philippines said the oversubscription reflects strong investor confidence in the bank’s near-term prospects.

UCPB posted a net income of P1.66 billion in 2009, and surpassed this in just the first nine months of 2010 as its profit hit P1.88 billion. At the end of October, the bank’s net income has reached P2.08 billion.

Catabran said UCPB will use the P4.5-billion proceeds from the LTNCD offering to further increase long-term loans to the middle market and the consumer sector — where margins are higher — to boost profits.

He said loans have been the key driver of the bank’s profit growth. In the 10 months to October, total loans of the bank increased 25 percent year-on-year, from P35.34 billion to P44.13 billion, pushing up interest income by 19 percent, or from P5.47 billion to P6.49 billion.