Bancommerce sees income hitting P557 M

MANILA, Philippines - Bank of Commerce, the banking arm of the San Miguel Group, said it is optimistic it would still hit its full-year income target of P557 million despite the harsh external conditions dictated mainly by the debt crisis in Greece and threat of a double-dip recession in the US.

Last year, the medium-sized bank reported a net income of P629 million.

At the end of August this year, its net earnings fell 58 percent to P208 million from P329 million as the impact of the crisis was reflected in trading and foreign currency gains, which reduced earnings in non-interest income.

The bank said it does not expect dramatic gains this year, as it is still in the middle of major changes, investments and expenses related to its expansion program. One key investment was the acquisition of a new core banking system worth $12 million last June.

It has likewise increased its capital base to P16.7 billion as of end August from P12.47 billion at the start of the year. It expects another capital infusion within the last quarter to bring its total capital base to P17 billion.

In an interview, BOC president and chief executive officer Sergio G. Edeza said the bank remains conservative as it prepares for major thrusts moving forward.

 “In fact, we have terminated some of the loans that do not fit in the new scheme of things. But we have also made major investments,” Edeza said.

Its loan portfolio stood at P28 billion in August, 18 percent lower than the P33 billion in the same period last year. Provisioning for probable loss stood at P372 million.

The treasury portfolio accounts for roughly 40 percent of bank’s earning stream. Another 30 percent comes from its corporate banking portfolio, 13 percent from its consumer loans, and the rest from fee-based earnings.

Capital adequacy ratio (CAR), a measure of a bank’s profitability and liquidity, stood at a strong 19.3 percent. The Bangko Sentral ng Pilipinas (BSP) requires a minimum 10-percent CAR while the global benchmark of Basel II risk-based capital wants it at a minimum eight percent.

Meanwhile, the newly-installed core banking system will compliment the continued expansion of the automated teller machine (ATM) network which presently stands at 229. It is expected reach 300 by the end of the year, adding another 300 in the next few years.

In fact, Bancommerce is considering to put up one ATM in every Petron gasoline station. Petron Corp. was acquired a few years back by the San Miguel Group. Another option is to put up ATMs in San Miguel-affiliate offices and work places.

In 2007, San Miguel Properties Inc. (SMPI) and the SMC Retirement Plan acquired majority stake in BOC for P2 billion. Since then, the bank had been re-oriented towards the San Miguel culture.

“The bank is now ready to move forward, and tackle the San Miguel eco-system,” Edeza said.

The San Miguel eco-system accounts for six to seven percent of the country’s gross domestic product (GDP) annually.