Bank of Commerce will issue peso bonds to raise P3 billion
July 12, 2022
By selling its first peso bond, Bank of Commerce hopes to raise at least P3 billion from the local debt market.
San Miguel Corp. (SMC), a diversified corporation, is raising money as part of its P20 billion bond program.
According to Bank of Commerce, the public will be able to purchase Series A bonds with a tenor of two years and a fixed rate of 5.0263 percent per year from July 11 to 22. On July 29, the bonds will be listed on the Philippine Dealing and Exchange Corp. (PDEx).
According to the listed bank, there is a possibility of an oversubscription for the bond issuance, and the issuer may shorten the offer time. In addition to Bank of Commerce serving as a selling agent, it has designated ING Bank N.V., Manila Branch (ING) and Philippine Commercial Capital Inc. (PCCI) as joint lead arrangers and joint bookrunners.
In order to decrease interest rate risk, diversify financing sources, and for general business reasons, Bank of Commerce stated that the funds raised would be used to manage the bank’s net interest margin by aligning long-term assets with long-term funding.
Despite ongoing local and global market volatility, Bank of Commerce’s earnings more than doubled to P360.6 million in the first quarter of this year from P146.3 million in the same period last year. This growth was driven by robust core business operations.
The listed bank recorded a 6.5 percent increase in net interest earnings to P1.47 billion from P1.38 billion, driven by the growth in earning assets. Interest income increased to P1.66 billion from P1.56 billion while interest expense increased to P194.88 million from P183.87 million.
Other income nearly doubled to P271.77 million in the first quarter from P140.84 million in the corresponding period last year. Earnings from service fees, commissions, and other fees increased by 42 percent to P159.09 million from P111.99 million and by 72.4 percent to P85.01 million from P49.3 million.
Additionally, Bank of Commerce reported P42.59 million in foreign exchange profits in the first quarter, offsetting P3.99 million in losses from the same period the previous year.
Losses from trading and investing in securities, on the other hand, increased marginally by 1.7 percent to P29.08 million from P28.6 million.
The SMC-led bank reduced operating costs by 2.7 percent to P1.24 billion from P1.28 billion as it demonstrates operational efficiency. This reduction was primarily driven by increases in management and professional fees, amortization of software costs, taxes and licenses, as well as insurance.
