BPI sees stiff competition for corporate loans this year

MANILA, Philippines -  The Ayala-controlled Bank of the Philippine Islands (BPI) is looking at a high single-digit growth in corporate loan this year even as it expects competition to be fierce as companies prepare to raise additional capital for expansion.

BPI executive vice president Alfonso L. Salcedo Jr. said their expected loan expansion was notably optimistic considering that the bank already registered high double-digit growth in 2010.

“2011 will be tough since we are coming from a strong year in 2010,” Salcedo said, adding that he believes BPI will continue to outperform the industry as it did in 2010.

Salcedo said 2011 will also be a challenging year as gains from treasury activities will shrink relative to the record-setting performances of the country’s bourse last year. The Philippine Stock Exchange (PSE) remains in a consolidation mode after setting record levels above 4,200.

 “We expect less from treasury, up to a 50-percent reduction,” he said.

He noted that since most of the big commercial banks will be courting the conglomerate accounts, this will lead to intense competition.

“Demand is going to be there, and a lot of banks will be issuing loans, corporate or debt papers to raise capital. Large corporations will look for various ways of raising capital, as well as alternative sources of capital,” Salcedo said.

Mergers and acquisitions will remain the order of the day for the conglomerates, led by the Metro Pacific and the San Miguel empires.

The big corporations are also expected to lead the market in the Public-Private Partnership (PPP) program of the Aquino administration, as well as other non-PPP infrastructure projects, which include those in the power and transportation sector.

 “These are going to be huge numbers,” the BPI official said.

BPI also pointed out that their corporate accounts in the provincial areas grew much faster than those located within Metro Manila.

 “The most robust group in our corporate accounts is the middle-tier group. And geographically, our provincial corporates grew by 20 percent,” said Salcedo, the former president of BPI Family Savings Bank. These provincial accounts are located throughout the Philippines.

Last year, BPI reported a robust growth rate in terms of income, registering a 33-percent expansion from P8.5 billion in 2009 to a record P11.3 billion.

Gross loans expanded by 16 percent to reach P387 billion, as all market segments including the corporates, sustained double-digit growth rates.