Landbank to issue $120-million tier 1 notes

MANILA, Philippines - The Land Bank of the Philippines (Landbank) is eyeing to issue up to $120 million in hybrid tier 1 notes this year mostly for its lending operations, a ranking official said yesterday.

In an interview with The STAR, Landbank executive vice-president Cecilia Borromeo said the bank is already working on the documentary requirements for the debt sale. “If we can come up with all the requirements, we will likely do it this year,” she said.

The debt issue, which will bpe arranged by Deutsche Bank and Citibank, will target long-term investors.

Borromeo said the tenor of the debt issue is still being finalized.

She nonetheless expressed optimism that the bank would be able to sell the notes because of its strong financial position.

The bank reported yesterday a net income of P4.6 billion posted in the first half of 2010. 

The latest figure is 28 percent higher than the P3.6 billion-net income registered in the same period last year. 

Landbank president and chief executive officer Gilda Pico attributed the significant increase in the bank’s net income to improved core revenues generated from loans and investments which grew by 10 percent to P14.1 billion from P12.8 billion last year.

Moreover, cost of deposits and borrowings were effectively managed.

Return on equity remained at a high 18.6 percent and was a slight improvement from 18.3 percent a year ago.

“We’re intensifying our efforts to sustain the financial stability of Landbank through strategic initiatives, good governance and prudent management,” Pico said.

Landbank’s total assets reached P530 billion, 13 percent higher from last year’s P470 billion. Deposits likewise grew to P408.7 billion from P362.2 billion last year. Capital also increased by 17.5 percent to P50.6 billion from last year’s P43.1 billion.

Data from the bank also showed that its total regular loans expanded significantly by 16.9 percent to P199.9 billion from P171 billion in 2009.