Sunday, 25 April 2010

BDO sees ’10 profits surging on construction loans

Manila Standard

Banco de Oro Unibank Inc., the lender owned by Henry Sy, the richest man in the Philippines,
expects earnings to climb for a second year in 2010 as power companies and home builders increase borrowing.

The bank’s earnings of about P2 billion in the last two quarters of 2009 were “sustainable,” Nestor Tan, the bank’s president, said in an interview. At that rate, Banco de Oro’s 2010 earnings would jump by at least 30 percent from P6.04 billion a year earlier, according to Bloomberg calculations.

Bangko Sentral forecasts lending growth of 10 percent or more this year as loan demand and spending recover from the global credit crisis and the collapse of Lehman Brothers Holdings Inc. Power outages across the country have also boosted the need for construction funding as utilities, including Aboitiz Power Corp., plan to build plants.

“We’re looking at higher profit, putting the crisis and Lehman behind us,” Tan, 52, said Thursday. “Big-ticket items” like spending on energy and infrastructure projects would probably come after the May 10 elections, he said.

Aboitiz Power, the country’s second-largest power distributor, has said it may spend $2 billion to build and buy power plants in the next three years after low water levels across the country reduced output at hydroelectric plants. San Miguel Corp., the biggest food and beer maker, this month said it could access as much as $8 billion in funding as it expands in energy, rail and toll roads.

Banco de Oro will raise $250 million from a share sale ending Friday, boosting the ratio of capital to risky assets to 14 percent from about 12.5 percent, Tan said, to support loan growth of 15 percent to 20 percent.

Armed with fresh capital, the bank was targeting smaller lenders to add to its network of 735 branches and accelerate lending growth, he said. The bank has increased its assets by almost 14 times since 2000 through acquisitions.

“We’re still looking at acquisitions,” Tan said, adding that Banco de Oro was in discussions with Export & Industry Bank Inc. and had “exploratory talks” with Asiatrust Development Bank.

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