Bank of Commerce to raise P3 billion via peso bonds

MANILA, Philippines — Bank of Commerce is raising at least P3 billion as it taps the domestic debt market through its maiden peso bond offering.

The fund raising activity of the banking arm of diversified conglomerate San Miguel Corp. (SMC) is part of its P20 billion bond program.

Bank of Commerce said the Series A bonds with a tenor of two years and a fixed rate of 5.0263 percent per annum would be offered to the public from July 11 to 22 and would be listed on the Philippine Dealing and Exchange Corp. (PDEx) on July 29.

The listed bank said the bond issuance has an oversubscription option, while the issuer could shorten the offer period. It has appointed ING Bank N.V., Manila Branch (ING) and Philippine Commercial Capital Inc (PCCI) as joint lead arrangers and joint bookrunners, while Bank of Commerce is also acting as a selling agent.

According to Bank of Commerce, the proceeds of the fund raising activity would be used to manage the bank’s net interest margin by matching long-term assets with long-term funding to reduce interest rate risk, to diversify funding sources, and for general corporate purposes.

The earnings of Bank of Commerce more than doubled to P360.6 million in the first quarter of the year from P146.3 million in the same quarter last year on the back of strong core business activities despite the continuing local and international market volatilities.

Driven by the growth in earning assets, the listed bank reported a 6.5 percent increase in net interest earnings to P1.47 billion from P1.38 billion as interest income grew by 6.5 percent to P1.66 billion from P1.56 billion, while interest expense went up by six percent to P194.88 million from P183.87 million.

Other income almost doubled to P271.77 million in the first quarter from P140.84 million in the same period last year as earnings from service charges, fees and commissions jumped by 42 percent to P159.09 million from P111.99 million, while gains on foreclosure and sale of property surged 72.4 percent to P85.01 million from P49.3 million.

Bank of Commerce also booked foreign exchange gains amounting to P42.59 million in the first quarter, reversing the P3.99 million losses recorded in the same quarter last year.

On the other hand, losses from trading and investment securities inched up by 1.7 percent to P29.08 million from P28.6 million.

As it continues to demonstrate operational efficiency, the SMC-led bank trimmed its operating expenses by 2.7 percent to P1.24 billion from P1.28 billion fueled by increases in management and professional fees, amortization of software costs, taxes and licenses as well as insurance.