Sy-led BDO still keen on acquiring other banks

MANILA, Philippines - Sy-led Banco de Oro Unibank Inc. (BDO) still has the appetite to acquire more banks after GE Money Bank as it sees consumer lending as a growth area, bank president Nestor V. Tan said Friday. As BDO is already the country's largest lender, Tan said "size is just a byproduct of our way of doing business." "Being the biggest is just the result of doing things properly. That should be our focus. The balance sheet is not the only measure of business growth. You have also off-book businesses such as trust, investment management accounts and private banking," he told reporters before the annual stockholders' meeting. As of 2008, BDO overtook George S. K. Ty-led Metropolitan Bank & Trust Co. in terms of resources at P808 billion and deposits at P634.3 billion. BDO maintained its dominance in gross customer loans at P393.2 billion. The bank, which has been a product of mergers and acquisitions, has the third largest network among local banks and second largest in terms of ATM network. Its merger with Equitable PCI Bank on May 31, 2007 changed BDO into a full-service bank across all market and geographic segments. "We still have growth. That is why we are still looking at acquisition opportunities. We believe the market can still grow. You have to look at these (acquisitions) as eventually productive asset. If there is any opportunity to grow the market, you need a productive asset to capitalize on the growth. You have to look at the asset that you are buying and see what potential you can get out of it," Tan said. "The challenge is how to translate that potential into reality. In our previous acquisitions, we have been able to successfully maximize the value of our productive assets," he added. General Electric Co. will transfer its local bank GE Money Bank to BDO in exchange for a 1.5 percent stake with an option to increase it further to 10 percent. BDO disclosed the value of GE Money Bank is approximately P1.5 billion based on net adjusted clean book value plus a premium for GE Monday Bank's franchise. Its value will be fixed at completion of the transaction due to the requirement of regulatory approvals expected in the third quarter. GE Capital will acquire BDO shares through the bank's issuance of new shares. This year, BDO is looking at a 172 percent growth in net income to P 5.5 billion from P2.18 billion in 2008 amid adverse economic fundamentals to temper business activities. Net interest income is seen to grow by 38 percent to P32.78 billion from P23.04 billion on higher interest income and and interest expense. Gross income is expected to improve by less than a quarter to P46.31 billion from P36.71 billion while operating income is targeted to go up by 19 percent to P950.82 billion fromP802.03 billion. "Basic lending and deposit-taking should continue to prosper. Opportunities for lending to creditworthy borrowers still present. Service businesses generating fees should also remain buoyant. Moderate growth for loans and deposits will further boost net interest income while fee income will remain strong," he said. "Trading gains will be muted due to uncertainty in the markets. Uncertainty in the economy may require conservative provisioning levels," he added. - Ruby Anne M. Rubio, GMANews.TV