Landbank to issue Lower Tier 2 notes

MANILA, Philippines - State-owned Land Bank of the Philippines announced yesterday plans to issue Lower Tier 2 Subordinated Notes (LT2 Notes) to strengthen its capital base.

Landbank, rated ‘AA’ by United Kingdom-based Fitch, will offer a minimum of P3 billion in LT2 Notes after obtaining the green light from the Bangko Sentral ng Pilipinas (BSP).

The offer period is from May 21 to June 3, 2009 subject to market conditions and may be adjusted depending on the demand, Landbank president and chief executive officer Gilda Pico said.

Bookbuilding of the offer will start on May 21, 2009 with the indicative initial interest rate of “7.25 to 7.75 percent area” per annum, subject to market demand and other conditions.

The LT2 Notes will be issued at 100 percent of face value, Pico added.

Landbank has tapped Deutsche Bank AG as the sole arranger and a selling agent for the transaction.

Other selling agents are the Development Bank of the Philippines and the Multinational Investment Bancorporation.

Landbank posted a net income of P1.7 billion in the first quarter of 2009, a hefty 40 percent increase from the P1.2 billion registered during the same period last year. Annualized return on equity reached a high 18.3 percent in March 2009 from 13.3 percent last year, data from the bank also showed.

The bank’s regular loan portfolio also expanded by 42 percent from P130 billion in March 2008 to P185.1 billion in March this year. Of the total loan portfolio, 67.4 percent or P124.7 billion were extended to the bank’s priority sectors namely; farmers and fisherfolk; micro, small and medium enterprises; agri-infrastructure; agribusiness and other agri- and environment-related projects.

Landbank is mandated to promote growth in the countryside by providing credit assistance to small farmers and fisherfolk cooperatives, micro entrepreneurs and small and medium enterprises (SMEs), agri-business, agri-infrastructure projects of local government units, and other agri-and environment-related projects.

Data also showed that Landbank’s assets also increased during the first quarter by 11 percent or P41 billion to P427 billion from P385 billion last year.

Deposits also grew by 11 percent to P326 billion from P292 billion while capital went up by 9 percent to P38.7 billion from P35.5 billion.

At present, Landbank ranks among the top five universal banks with a large network of branches and automated teller machines (ATMs).

It has 324 branches and 817 ATMs which are well distributed in the country’s 80 provinces.