Philippine Business Bank commits service for SMEs

CEBU, Philippines - While most financial institutions cater to large corporates and consumer banking, the Philippine Business Bank guaranteed continued and committed service in the years ahead to the small and medium enterprises (SMEs) that serve as the backbone of the Philippine economy.

PBB Senior Vice President and Controller Alice Rodel said that the bank acknowledged the needs of the SME sector especially in terms of access to capital for them to grow their businesses.

“It is our commitment and our choice to serve the SME market, to provide them with the opportunity to continue trading in the future. As they grow, we would want to grow with them. PBB will be part of this growing market as they continuously contribute to the national economy,” she stated during the investors’ briefing held in Cebu.

Banking on its strong track record of asset growth and robust return generation year-on-year, PBB claims that to be the only bank that is exclusively and deliberately focused on SMEs as most banks consider the market as risky.

PBB is the 7th largest thrift bank in the Philippines in terms of asset size at P29.7 billion and has the highest capital adequacy ratio in the thrift bank industry at 21.9%.

As the bank’s niche market, PBB considers SMEs to present only moderate risks since they offer diversification while retaining strong potential for growth.

Rodel added that the bank has a disciplined approach of managing resources that could allow SMEs to expand and that their business processes and risk management are in place.

PBB president and chief executive officer Roland Avante also echoed the same assurance with Rodel, saying that “PBB is the bank that will stay and grow in the banking industry as we capitalize ourselves with the growth in the SME market.”

Also, Filipino Cebuano Business Club President Rey Calooy affirmed that almost all players in the banking sector are reaching out to help SMEs grow.

“This is the untapped potential market since 99% of all business establishments are MSMES. Most large companies have their own funding coming from the sale of the initial public offering in the Philippine Stock Exchange,” he told The Freeman.

SMEs, businesses with assets of between P3 to P100 million, are reported to contribute 32% of the employment in the country, 36% of sales and 25% of export revenues.

The “relatively underserved” segment is considered to be major source of entrepreneurship and economic dynamism and the provider of trade, manufacturing, outsourcing, and services that contribute to community and local development.

With fewer resources than large-sized businesses, SMEs have a more urgent need to borrow to take advantage of the growing economy.

Representing the largest chunk of its loans, the SME sector accounted for more than 62% on the average from 2009 to 2011 and grew at an average of 31% on the same period.

Corporates, on the other hand, ranked as the second biggest segment with an average of 34% loan share from 2009 to 2011 but registered the highest year-on-year growth of 79% as of September 2012.

Avante cited that PBB plans on expansion of branch network in target locations where there is a strong SME base, branch management, tailored lending services and personalized transactions among others to live up to such commitment to the market.

Through its initial public offering this month, PBB expects to raise P3.19 billion to achieve its plans of reaching 100 branches nationwide by the end of 2013 that is strategically designed to target key areas and cities with strong SME base.

The Yao thrift bank plans to put up more 22 branches in addition to its network of 72 branches located throughout the country.

In Cebu, PBB has three existing branches.

The bank will allocate P300 million from its proceeds to its branch expansion program, P100 million to its IT projects, and P2.6 billion for asset acquisition.

PBB has set the final price at P31.50 per share for its 101.33 million new common shares which is 29.5% of the bank’s issued and outstanding common shares post-IPO capital.

Offer period was scheduled from February 6 until February 12 while the listing and trading shares is on February 19.

Managed by Chairman Emeritus Alfredo Yao and Chairman of the Board Francis Lee, PBB has celebrated its 16th year last February 12. (FREEMAN)