UnionBank to conduct P10-billion SRO next month

UNIONBANK of the Philippines will proceed with its planned stock rights offer next month, as it works to raise fresh capital to support expansion.
In a disclosure on Friday, the bank said it will offer up to 200 million common shares via a stock rights offering in September, two months later than its original plan.
Back in May, UnionBank Chief Financial Officer and Treasurer Jose Emmanuel U. Hilado said the lender plans to issue P10 billion worth of additional shares by July of this year, after securing approval from the bank’s board of directors.
The Aboitiz-led lender told the Philippine Stock Exchange this week that it will be offering the additional shares to all stockholders on record as of Sept. 3.
The offer period will start on Sept. 10 and end on Sept. 21. The offer price is yet to be determined.
The additional capital will boost the lender’s common equity Tier 1 and total capital adequacy ratio of the bank.
“The proceeds from the stock rights offer will be used to allow for continued growth of assets of the bank,” UnionBank told the local bourse.
Mr. Hilado has said that Citibank has been tapped as the arranger for this stock rights offer. Aside from this, the bank executive added that the bank can still tap other capital-raising instruments to shore up additional funding.
UnionBank can still raise an additional $500 million from its euro medium-term note program, as well as peso funding via additional tranches of long-term negotiable certificates of deposit. These debt papers are offered on a continuing basis until such a time when the ceiling amount is reached.
A number of banks have been tapping the capital markets as they boost their asset bases, in anticipation of the full implementation of tighter standards imposed by the central bank by 2019.
So far, UnionBank has raised P3 billion from long-term notes versus a P20-billion program. The bank has also secured $500 million from its offering of global notes in November last year.
UnionBank is the country’s ninth-largest player in asset terms. The bank made P4.7 billion during the first six months of 2018, 8% higher than the P4.4 billion profit booked during the same period last year.
Loans grew by 18% year-on-year to P313 billion, which boosted net revenues higher by nearly a tenth. Mr. Hilado said the bank is ahead of its income target for the year, and expects loan margins to improve at a time of rising interest rates.
UnionBank shares went down 10 centavos or 0.12% to close at P83.90 each on Friday. — Melissa Luz T. Lopez