BDO Leasing to tap parent firm's clients

MANILA, Philippines - BDO Leasing and Finance Inc., a subsidiary of Banco De Oro Unibank Inc. (BDO), is looking to expand its client base to the vast corporate accounts of the commercial bank.

BDO operates a branch network of over 700 nationwide, which the leasing firm seeks to tap. The company targets to expand to the branches based in Luzon and the Visayas.

In a report, BDO Leasing said it also plans to increase its funding base in the next semester by tapping the capital markets.

“We will apply for an increase in our short term commercial paper (STCP) license with the Securities and Exchange Commission,” said Roberto E. Lapid, BDO Leasing president. Last year, it secured an approval to launch an STCP worth P8 billion.

Expanding its STCP license will allow the leasing company to ensure a level of funding compatible with its level of volume or business. It will likewise allow for the upgrading of its information technology (IT) systems.

 “We will continue to enhance our IT system to fully address the requirements of new accounting standards, This is in coordination with our parent bank’s IT group. We will maximize the lower funding cost,” Lapid said.

Meanwhile, the leasing and finance firm recorded a net income of P144.3 million in the first semester of 2010, 22.7 percent higher than the P117.6 million realized in the same period last year. In 2009, total revenues reached P2.21 billion, up 61.4 percent from the P1.37 billion in 2008.

Total assets stood at P14.7 billion, due mainly to the net increase in the volume of loan and lease receivable by P3.5 billion. Available-for-sale investments increased by P1.3 billion representing the company’s investment in San Miguel Corp. preferred shares.

Gross revenues reached P1.112 billion, or an increase of 9.34 percent from the P1.017 billion in the same period last year. Interest, discounts, rent and service fees, which represents 91.6 percent of gross revenues, rose five percent to P1.020 billion during the period.

“This was primarily due to the increase in gross loans receivable portfolio from P8.8 billion in June 2009 to P13.8 billion in June this year,” the BDO Leasing chief executive said, adding that other income increased 101.52 percent from dividend income from SMC preferred shares.

The report likewise stated that interest and financing charges amounted to P163.1 million, consisting of financing charges on borrowings for P138.6 million and interest expense on leased deposits for P24.5 million.

Total provisioning for credit losses was up from P30 million in the first semester of 2009, to P65 million this year.

Known as PCI Leasing and Finance Inc. before the merger of BDO and Equitable PCI Bank in 2007, BDO Leasing leases equipment and properties to commercial clients. It also extends commercial and consumer loans for the purchase of automobiles, office equipment, machinery, real property and financial assets.