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Wednesday, November 29, 2023

BPI merger with Robinsons Bank seen to boost income, revenues

BANK of the Philippine Islands (BPI) expects its net income to climb by 5-6% and its revenues to rise by around 7% once its planned merger with Robinsons Bank Corp. takes effect, its top official said.

“Robinsons Bank is expected to expand BPI’s key balance sheet metrics by between 6.5%, maybe 7%. As mentioned over the past years, Robinsons Bank has been really steadily growing its deposit and loan books at a pace much faster than industry,” BPI President and Chief Executive Officer Jose Teodoro “TG” K. Limcaoco said in a special stockholders’ meeting on Tuesday.

Shareholders of the Ayala-led bank owning 79.69% of total outstanding stocks approved the planned merger on Tuesday.

Mr. Limcaoco said the main advantage Robinsons Bank has that was factored into the projected revenue growth is its customer base’s strong digital adoption, with over 35% of their retail clients enrolled in its online app.

“So, we think that Robinsons Bank can potentially add about 7% to our revenues, and 5 to 6% to our net income,” he said.

Mr. Limcaoco added that the merger is expected to immediately improve BPI’s industry ranking in terms of deposits to second place from third currently.

He noted that Robinsons Bank’s current and savings (CASA) ratio of 83% is higher than BPI’s by 4% and it has “manageable asset quality,” which is not seen to have a negative impact on BPI’s.

The official said they see growth opportunities in Robinsons Bank’s lending book, including in the housing, salary, motorcycle and teachers loan segments and its “unique” credit card portfolio, and that he expects these to help in achieving BPI’s target to have consumer credit comprise 30% of its loan portfolio.

“They have a significant portion of their loan book as consumer loans, but really, their loan book is about 6% of the combined loans of BPI and Robinsons Bank. So, if the merger in and of itself will not really bring us to our aspirations of 30% consumer loans, what we will be doing is taking some of their products, some of their approaches, utilizing their ecosystem,” Mr. Limcaoco said.

He added that the merger is expected to take effect on Jan. 1, 2024 as they still need to secure some approvals from government agencies.

BPI booked a net income of P10.1 billion in the third quarter of 2022 amid higher revenues.

This brought the bank’s bottom line for the first nine months of 2022 to P30.5 billion, backed by higher revenues and lower provisions for loan losses.

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