Home Top News DBP planning to raise P3-5 billion in capital under charter changes

DBP planning to raise P3-5 billion in capital under charter changes

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DEVELOPMENT BANK of the Philippines (DBP) will look to raise P3 billion to P5 billion in the next few years once the planned increase in its authorized capital stock under the proposed amendments to its charter is approved, its top official said.

“Maybe in the next few years, maybe at this point, [we’ll try to raise] maybe about P3-5 billion approximately. Right now, we’re at P85 billion in total [equity] as of 2023,” DBP President and Chief Executive Officer Michael O. de Jesus said.

The Department of Finance is proposing to amend the charters of state-run banks DBP and Land Bank of the Philippines (LANDBANK) to raise their authorized capital stock and allow for their public listing.

The proposal seeks to hike the DBP’s authorized capital stock to P300 billion from P35 billion and the LANDBANK’s to P1 trillion from P200 billion previously.

Mr. De Jesus previously said it was studying the possibility of raising 20% of its capital stock from its proposed initial public offering under planned changes to its charter. This would be equivalent to around P7 billion, which is 20% of the bank’s current P35-billion capital stock.

The remainder of the proposed increase in DBP’s capital stock to P300 billion will likely be generated internally, the official said.

“In the future, the government can come in as often as possible or there could be foreign investors that could come in. So, we have various options,” Mr. De Jesus said.

“It will help in the development of the capital markets, that’s number one… We’re thinking of having maybe 30% public, but 70% will still be controlled by the government,” he added.

Meanwhile, DBP’s planned bond issuance in the third or fourth quarter is expected to boost its lending, he said.

The central bank’s expected rate cut in the second semester could affect the pricing of their planned issuance, Mr. De Jesus said.

The official previously said DBP will likely issue peso-denominated notes with short-term tenors to fund its general corporate requirements.

“We’ll have more funds to lend at a lower cost. That’s the objective because we’re in the lending business. We want to diversify our funding sources. We want our funding sources to be at a lower cost. The best, of course, are current accounts. That’s the cheapest,” Mr. De Jesus said.

“Before, they were lending to achieve certain target levels. But what I want to do is really selective lending. Meaning, it’s not just lending that complies with our mandate, which is basically infrastructure financing, energy, social services, MSMEs (micro, small and medium enterprises). I’m not really after targeting certain volumes,” he said.

DBP is looking at expanding the share of current and savings accounts in its total deposits and growing its branch network, Mr. De Jesus added.

He earlier said the bank is bullish on its outlook for this year and expects the bank’s performance to be “slightly better” than in 2023.

The official said DBP’s 2023 net profit was “comparable” and marked a “slight improvement” from the year-ago level driven by an increase in loans and fee income, but did not provide specific figures.

Latest available data showed the state-run bank’s net profit jumped by 60% year on year to P4.42 billion in the first half of 2023, driven by gains from foreign exchange and the sale of properties. — AMCS

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