BANK of the Philippine Islands (BPI) plans to raise at least P5 billion through a public offering of sustainability bonds next month, with the proceeds intended to finance or refinance eligible green and social projects.
In a statement on Monday, BPI said the proposed fixed-rate BPI Sustainable Impact Building Our Legacy (Sibol) bonds would have a tenor of one year and nine months, with a base size of P5 billion and an option to increase the offer amount.
The bonds, due in 2028, represent the third tranche under the bank’s P200-billion bond and commercial paper program.
Net proceeds will be used to finance or refinance eligible green and social projects under the bank’s Sustainable Funding Framework, consistent with the Asean Sustainability Bond Standards.
The Securities and Exchange Commission on Oct. 20 authorized the bonds to carry the Asean Sustainability Bond label.
The public offer period will run from Nov. 23 until Dec. 4, with issuance and listing on the Philippine Dealing & Exchange Corp. expected on Dec. 16, subject to possible changes in the offer terms and schedule.
BPI Capital Corp. and ING Bank N.V., Manila Branch were tapped as joint lead arrangers and selling agents.
The offering coincides with BPI’s 175th anniversary, with the bank saying the bonds’ 1.75-year tenor symbolizes its 175 years of service.
BPI said the bonds were exempt from registration under Section 9.1(e) of the Securities Regulation Code and would not be registered with the SEC. Hence, the securities will not be insured by the Philippine Deposit Insurance Corp.
Q4 earnings seen flat
Meanwhile, BPI said it expected flat earnings performance in the fourth quarter as persistent economic pressures continue to weigh on consumers.
“The economic situation, high inflation, high fuel prices and high food prices is causing some strain on the consumer, and to be prudent, you do have to put up more provisions for that,” BPI President Jose Teodoro Limcaoco told reporters on Monday.
“So if you look at our earnings, it really is about more provisions than anything else,” he said “So I think the fourth quarter will be similar to the third quarter.”
The bank reported a 3.2-percent decline in nine-month net income to P48.9 billion, down from last year’s P50.5 billion, as higher provisions and operating expenses outpaced revenue growth.
Provisions in the nine months surged 69.2 percent year on year to P19.9 billion, although third-quarter provisions declined 16.5 percent from the previous quarter. BPI’s non-performing loan (NPL) ratio also increased quarter on quarter to 2.5 percent, while its NPL coverage ratio stood at 89.6 percent.
Limcaoco emphasized, however, that the bank intended to continue supporting consumer lending, which it sees as a growth driver for the economy. But BPI will be more deliberate in extending credit as inflation and higher living costs affect borrowers’ financial positions, he said.
“You have to continue to focus on the consumer sector. That is the growth area of this country,” Limcaoco said.
For next year, he remained optimistic that economic conditions could improve if inflation begins to ease and geopolitical risks subside.
“I’m hopeful next year gets a little better,” Limcaoco said, adding that that the Bangko Sentral ng Pilipinas’ (BSP) policy decisions would depend in part on how inflation and the broader economic outlook evolve.
“If the Middle East crisis passes, El Niño passes, you’ll see inflation come down, and then you’ll see the BSP able to take down rates,” he said.
BPI shares on Monday slipped P3.20, or 3.30 percent, to close at P93.80 each, amid a 1.53 percent drop for the benchmark Philippine Stock Exchange index.
