RCBC Capital sees more opportunities for bankers

MANILA, Philippines - RCBC Capital Corp. (RCBC Capital) is confident that opportunities abound for investment bankers, what with the strong demand for capital as corporations continue its aggressive expansion programs.

RCBC Capital president and chief executive officer Jose Luis F. Gomez said the demand will be coming from the power, property, project finance, and the ongoing public private program (PPP) projects of the Aquino administration.

“There will still be initial public offerings (IPO), debt or loan syndications and corporate consultation requirements leading to mergers and acquisitions (M&As),” Gomez said.

It was one of the joint lead undertakers of the IPO launched by developer DoubleDragon Properties Corp. early this year, which raises over P1.16 billion proceeds.

Other projects RBCB Capital was involved in were: the Petron Corp.’s P10 billion issue; Cavitex P6 billion; P3-billion raised by North Luzon Renewal Energy Corp.; Alternergy fund raising worth $105 million; and Carmen Cooper syndication which raised $90 million.

In the first half of 2014 alone, the investment bankers were involved in Tier 2 notes and long-term negotiable certificate of deposits (LTNCD) issues reaching P26 billion. In the whole of 2013, the amount raised was valued at P34.3 billion.

Bank equity raised in the first semester this year reached P52 billion, three times larger than the full year of 2013.

Growth in the firms listed in the equity or stock market has shown strong earnings growth in the first semester, which reflected growth as high as 16 percent.

The country’s bourse is considered among the most expensive albeit still attractive.

However, the strong economic growth and capital demand leads to greater competition.

There are at least 30 investment banks affiliated to the Investment House Association of the Philippines (IHAP), with roughly 10 are affiliated with banks and conglomerates.

“For the industry, it will be harder and lot more competitive,” Gomez said. “And the larger investment houses are gearing up for the competition.”

RCBC Capital is a subsidiary of the Rizal Commercial Banking Corp. (RCBC), which in turn is a member of the Yuchengco Group.

The investment bank reported a net income of P430 million in 2013, a flat growth rate from the P429 million reported in 2012. It was even lower than the P447 million in 2011.

Gomez forecasts income growth this year and next year to expand by an average 20 percent.

“Our return on equity (ROE) grew by a modest 10 percent and assets well above P5 billion. Our capital base has grown beyond P3 billion or well above the P300-million minimum capital required by the regulators,” he added.