MANILA, Philippines - East West Banking Corp. is improving its balance sheet by exercising a call option on P1.5 billion worth of notes to comply with stricter capital standards and finance future expansion plans.
EastWest corporate planning officer Aerol Paul Banal informed the Philippine Stock Exchange (PSE) the bank was authorized by its board of directors to exercise the call option on its P1.5 billion non-Basel III compliant Lower Tier-2 notes.
Banal said the debt paper unsecured subordinated notes carrying a coupon of 7.50 percent have an optional redemption date of January 2016 and January 2021.
“We shall inform you as soon as we secure the corresponding regulatory approval,” Banal told the PSE.
A call option gives the holder the right to buy a certain quantity of an underlying security from the writer of the option, at a specified price up to a specified date.
Based on its financial statement, EastWest Bank said its capital jumped 48 percent to P30.3 billion in end June this year from P20.4 billion in end June last year.
It added its capital ratios to risk weighted assets remain above regulatory standards set by the Bangko Sentral ng Pilipinas (BSP) as of the first half of this year despite the more stringent rules with the implementation of Basel 3 capital standards.
EastWest Bank said its Common Equity Tier 1 (CET1) capital improved to 14.5 percent while its capital adequacy ratio (CAR) improved to 18.3 percent as of end June this year after raising P8 billion from a stock rights offering.
The higher capital would support EastWest Bank’s strategic growth initiatives such as expanding its balance sheet to meet increased demand, optimizing its expanded branch store network and expanding its products and services.
The stockholders of the Gotianun-led bank approved the increase in its authorized capital stock to P40 billion from P20 billion last April, giving the bank more flexibility should an investment opportunity present itself and should it need additional capital to support its expected organic growth.
The bank’s earnings slipped 3.7 percent to P1.01 billion in the first six months of the year compared to P1.05 billion in the same period last year.
The bank’s assets grew 31 percent to P204.9 billion in the first half of the year from P155.9 billion in the same period last year.
The growth in assets was propelled by the 23 percent expansion in loans to P131 billion. Deposits, on the other hand, grew by 25 percent to P158.1 billion from P126.1 billion a year ago.
EastWest Bank has a total of 359 branches, with 164 of these branch stores in the restricted areas and a total of 205 of these branch stores in all of Metro Manila.
The total ATM network is at 549, composed of 352 on-site ATMs and 197 off-site ATMs.