Henry Sy spending P11 billion to expand banking units

MANILA, Philippines — The family of retail magnate Henry Sy is spending P11 billion to finance the expansion of their banking empire.

In a disclosure to the Philippine Stock Exchange, the family’s investment holding arm SM Investments Corp. said the amount would finance the capital expenditures of BDO Unibank Inc. and China Banking Corp.

The bulk of the budget or P9.2 billion will go to BDO, while P1.8 billion will be used by China Bank. The amount accounts for about 17 percent of the P66.3 billion capex budget set by the SM Group for 2018.

Sy’s empire controls both BDO and China Bank. BDO is the country’s largest bank in terms of assets, capital, deposits and loans based on statistics by the Bangko Sentral ng Pilipinas.

BDO’s net income went up by seven percent to a record P28.1 billion last year from P26.09 billion in 2016 on strong growth across all business segments.

It opened 76 branches last year, bringing its total footprint to 1,180 branches and 4,000 ATMs nationwide – the largest distribution network in the country. It also has 26 overseas remittance and representative offices in Asia, Europe, North America and the Middle East.

“For 2018, BDO believes that its focused growth strategy, robust business franchise and solid balance sheet and capital base place the bank well-positioned to tap opportunities in growth sectors benefiting from the country’s favorable demographics and the government’s infrastructure buildup,” BDO earlier said in a statement.

Alexander Escucha, senior vice president and head of investor and corporate relations group at China Bank, said the bank has allocated P1.8 billion for capital expenditures this year, mostly branch expansion and renovation, and technology initiative.

“China Bank’s capex for 2018 is in line with average capex budgets from 2014 to 2017 of P1.8 billion,” he said in a text message.

About 45 percent of the amount would fund technology projects and initiatives, while 38 percent would go to branch expansion and renovation, he added.

China Bank, the country’s seventh largest lender, booked a 14.5 percent rise in profit to P7.4 billion last year from P6.4 billion in 2016 on the back of sustained growth in core and fee-based businesses.

China Bank, founded in 1920, has 596 branches to date, including the 160 branches of its retail bank arm China Bank Savings.

It is looking at raising up to P50 billion through a peso funding program covering a combination of long-term negotiable certificates of deposits (LTNCDs), retail bonds and commercial papers.

Aside from banking and financial services, Sy’s business interests also cover retail, property, mining and gaming, among others.