1 month ago
11
After its ₱5 billion bond offering period, San Miguel Corporation (SMC) affiliate Bank of Commerce (BankCom) was assigned an Issuer Credit Rating of PRS Aa plus (corp.), with a Stable Outlook, by Philippine Rating Services Corporation (PhilRatings).
An Issuer Credit Rating is an opinion on the general and overall creditworthiness of the company, evaluating its ability to meet all its financial obligations within a time horizon of one year.
PhilRating said a company rated PRS Aa (corp.) differs from the highest rated corporates only to a small degree, and has a strong capacity to meet its financial commitments relative to that of other Philippine corporates. The “plus” further qualifies the assigned rating.
A Stable Outlook, on the other hand, indicates that the rating is likely to be maintained or to remain unchanged in the next 12 months.
PhilRatings said the assigned rating and outlook take into account the opportunities arising from BankCom’s universal banking license, its synergies with the San Miguel Group, the bank’s satisfactory asset quality, and the sustained improvement in BankCom’s profitability.
The ratings firm positively notes that BankCom’s gross non-performing loans (NPL) ratio further improved, from 2.3 percent as of end-2022 to 1.7 percent as of end-September 2024.
The latter also compared favorably against the 2019 pre-pandemic ratio of 2.1 percent. The improvement was supported by a favorable combination of declining NPLs and loan portfolio expansion.
BankCom sustained its growth momentum in 2023, posting a significant increase of 55.8 percent in its net income to ₱2.8 billion. Bottom line further grew in the first nine months of 2024, with earnings climbing by 10 percent to ₱2.2 billion, versus a net income of P2.0 billion in the same period of 2023.
The expansion in the bank’s earnings was supported by higher revenues, coupled with controlled growth in operating expenses. In addition, BankCom’s provisions for credit and impairment losses were significantly reduced in line with the improvement in the bank’s asset quality.
BankCom offered at least P5 billion worth of its dual-tranche fixed rate bonds due 2027 (Series C Bonds) and fixed rate bonds due 2030 (Series D Bonds) last Jan. 28 to 30, 2024 as the third tranche of its increased P50 billion Peso Bond Programme.
The Series C Bonds have a tenor of two years and a fixed interest rate of 6.1942 percent per annum. The Series D Bonds have a tenor of five and a quarter (5.25) years and a fixed interest rate of 6.3494 percent per annum.
Interest shall be paid quarterly. Eligible individual investors that hold the Series D Bonds until maturity will enjoy a net fixed interest rate of 6.3494 percent per annum.
The Series C Bonds and Series D Bonds are targeted to be issued and listed on the Philippine Dealing & Exchange Corp. (PDEx) on February 19, 2025.
Proceeds from the issuance will be used for management of the bank’s balance sheet, diversification of funding sources, and general corporate purposes.
