East West Bank raises P2.8-billion capital

MANILA, Philippines - Mid-sized commercial bank East West Banking Corp. (EastWest Bank) is starting 2010 with very big moves, starting with capital worth a combined P2.8 billion.

It just received a P1-billion capital infusion from its stakeholders, and EastWest Bank will be going to the domestic capital markets to raise another P1.8 billion.

EastWest Bank president Antonio C. Moncupa Jr. said that the bank has tapped Unicapital Corp. as lead underwriter for its Tier 2 capital notes.

“We would use the fresh capital for expansion, fuel for our loan portfolios, and other opportunities,” Moncupa said.

It has 13 unused branch licenses that could increase its 90-branch network to at least 113 by the end of 2010. “We are also redeploying and redesigning other existing branches,” he added.

EastWest Bank is presently ranked sixth largest credit card issuer, as well as managing the sixth largest auto loans portfolio.

That position was helped along when it acquired late last year, AIG Phil Savings Bank, Philam Auto Finance and Leasing Inc., and PFL Holdings Inc.

Meanwhile, the capital rush was boosted by the recent upgrade to PRS A plus (corp.) from PRS A minus (corp.) by the Philippine Rating Services Corp. (PhilRatings).

Philratings said that EastWest Bank improved its profitability and asset quality, expanded its deposit base, increased its presence in the consumer loan market, and continued to receive unwavering support from its principal, the Filinvest Group.

The capital infusions, improving asset quality and branch expansion is expected to add value to its seeking the approval of the Bangko Sentral ng Pilipinas (BSP) for its universal banking license.

Moncupa claims that most of the major requirements have already been fulfilled, and that the application will be filed with the BSP as the remaining ‘minor details’ are being completed.

The approval of its application for a universal banking license should pave the way for its much-delayed initial capital offering (IPO) hatched in 2007.

“The IPO is a matter of timing, although we wanted to have a unibank license before we went public,” the bank president admitted.

EastWest Bank’s net income reached a record P416.7 million in the first nine months of 2009. This is a dramatic expansion from the P169.5 million in 2008.

Net interest income ballooned to P3.9 billion as a result of higher balance-sheet spread and a larger earning-asset base.

A half a billion pesos in earnings is an achievable forecast for the bank’s net earnings in 2009.