Security Bank seeks to raise P50B via LTNCDs
SECURITY BANK Corp. is looking to raise P50 billion via long- term negotiable certificate of deposit (LTNCD) which will be used to lengthen the maturity of its liabilities.
In a regulatory filing to the local bourse on Tuesday, Security Bank said its board of directors approved on Tuesday the issuance of P50-billion LTNCDs now up for central bank’s approval.
“The objective is to lengthen our deposit liabilities. We always want to have a portion of our deposit liabilities go beyond a certain tenor, so this is one of those activities. And the proceeds will also be in preparation for future growth. Admittedly, the conditions are a bit different. We are just getting ready for when things normalize,” Security Bank Executive Vice-President and Treasurer Raul Martin A. Pedro told BusinessWorld in a phone interview on Tuesday.
Mr. Pedro said the bank has yet to set a target date on the issuance of the first tranche of the program as this will be subject to market conditions.
“The market conditions aren’t very clear at this moment. We’d like to see normalization soon enough. When conditions are normal, definitely we’ll try to go for it,” he said.
He said the bank has yet to determine the tenor for the issue, but will likely be around 5.5 years, based on the bank’s previous LTNCD issuances.
In February, the bank raised P2.07 billion worth of 5.5-year LTNCDs out of its P20-billion program set to expire in May.
“We still have some room to issue off that program but really, the market conditions are a bit unclear, so I’m not certain that we’ll be able to finish what has been approved by May. So what we did was already to seek the approval to issue up to P50 billion,” Mr. Pedro said on Tuesday.
So far, he said the bank has raised more than P11 billion from its current P20-billion program.
Like regular time deposits offered by banks, LTNCDs offer higher interest rates. However, LTNCDs cannot be pre-terminated but can be sold on the secondary market, making them “negotiable.”
Security Bank saw its net earnings jump 17% in 2019 to P10.1 billion on the back of wider margins and robust growth in retail lending.
Shares in Security Bank went up P5.50 or 5.42% to end at P107 apiece on Tuesday. — Beatrice M. Laforga
