The lender expects the country’s economic gains to spur retail credit demand and borrowing by small and medium-sized businesses, said Cezar Consing, who became president in April. Owned by Ayala Corp. (AC) and Singapore’s DBS Group Holdings Ltd. (DBS), the bank is the ninth-largest in emerging Asia-Pacific with $24 billion of assets, according to data compiled by Bloomberg.
“I’d like our investment banking unit to punch at its own weight,” Consing, a former JPMorgan Chase & Co. banker, said on Aug. 30 in Manila. “Our goal is to be relevant in a bigger pond, and that bigger pond has got to be Southeast Asia. It doesn’t mean we have to be outside, it means we have to be big enough. If we’re going to make an acquisition, we have to make an acquisition that will change the game.”
Consing’s expansion plans follow the collapse of merger talks with Philippine National Bank in December, a deal that would have created the nation’s largest lender by assets. Philippine mergers and acquisitions are on pace to post the biggest year since 2008 as the economy is set to grow more than 6 percent for a second straight year, Bloomberg data show.
BPI, the country’s biggest bank by market value, most recently acquired ING Groep NV’s Philippine asset management unit in 2011.
Deals in the Philippines total $10.6 billion so far this year, more than double all of 2012 and poised to match the $11.2 billion achieved in 2008, according to data compiled by Bloomberg. Equity underwriting in the country stood at $3.9 billion, already exceeding last year and heading for a second straight annual increase, the data show.
In debt underwriting, BPI has slipped to 16th this year from 10th in 2012, according to the data.
Consing, previously a partner at New York-based Rohatyn Group, managing its private-equity business in Asia, said possible targets would fill gaps in its product offerings, add to its customer base or improve his bank’s efficiency.
“Acquisition really depends on the valuation,” Charles Ang, an analyst at COL Financial Group, said in a phone interview. “It can’t be done at all cost.”
Shares (BPI) of BPI have fallen 3.2 percent this year, compared with a 4.3 percent jump in the Philippine Stock Exchange Index.
The bank’s net income rose 1.1 percent in the second quarter from a year earlier, compared with a 44 percent gain in the previous three months.
“In terms of profitability, BPI is an industry leader,” Ang said. However, “with interest rates consistently going lower in recent years, margin has been also been declining for most banks. I think that is the challenge.”
The Philippines’s $250 billion economy expanded 7.5 percent in the second quarter, matching China’s pace to remain one of Asia’s best performers. Consing expects that growth to lift loan demand as incomes rise. The Philippines’s per-capita gross domestic product was $2,588 last year, according to World Bank data.
Lending to small-and-medium enterprises is increasing at about 15 percent a year, while housing loans are surging 20 percent, Teodoro Limcaoco, president of BPI Family Savings Bank, said separately.
“If we sustain those kinds of growth rates, per-capita income should go up and at some point it’s $3,000, $4,000, and a much greater percent of your population is creditworthy,” Consing said.
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