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MANILA, Philippines -- East West Banking Corp. on Monday defied the market slump on its debut on the Philippine Stock Exchange.
The bank's stock rose to as high as P20.70 apiece in early trade before closing at P19.78, or 6.9 percent higher than its initial public offering (IPO) price of P18.50 per share.
The shares of the Gotianun-led bank opened at P20.10 each, nearly an 8.7 percent premium from its issue price.
“It’s attractive at its IPO price. It generated interest given its potential moving forward,” said Astro del Castillo, managing director at First Grade Finance Inc.
EastWest Bank raised P5.2 billion from its maiden share sale of 245.32 million common shares, representing 25 percent of its total issued and outstanding shares.
The bank priced its IPO at the low end of its price guidance, a "generous" move on the part of parent company Filinvest Development Corp. to provide an upside for investors, said Antonio Moncupa Jr., the bank's president and chief executive officer.
"We're undergoing a lot changes in the coming years. Its balance sheet will dramatically change and I think that should attract investors to participate in the growth story that we're trying to lead in the next few years," Moncupa said.
Net proceeds of P2.34 billion would finance the payment of bank branch licenses, the expansion of the branch network and implementation of IT infrastructure.
EastWest Bank plans to spend P2 billion to open another 200 branches, raising its branch network to 350 by 2014 from the existing 150 branches.
The lender is building up its presence in Metro Manila after securing 75 out of the more than 170 licenses in the area recently auctioned off by the Bangko Sentral ng Pilipinas.
By 2014, the bank will have the fifth largest presence among banks in the former restricted areas of Makati, Mandaluyong, Manila, Paranaque, Pasay, Pasig, San Juan and Quezon City with about 165 branches.
The bank expects to obtain its certificate to operate as a universal bank next week following the company’s listing, Moncupa said. It is the last remaining condition that the company has to fulfill before it can secure the certificate.
In November, the BSP approved EastWest Bank’s application for a universal banking license, allowing the bank to engage in other activities like investment banking, industrial ventures and even real estate development.
Besides its plans to expand its nationwide footprint, EastWest Bank plans to grow its lending portfolio, targeting the underserved consumer and middle-market corporates.
The bank is targeting a loan portfolio mix consisting of 40 percent consumer loans, 40 percent mid-market corporate loans and 20 percent large corporate loans. The bank earlier projected a 20 to 25 percent growth in its loan portfolio for the year.
"We still need a portion to be allotted to the bigger corporates because we have to make sure the risk profile of the loan profit is such that it could withstand the risks of the business cycle," Moncupa said.
EastWest Bank has yet to finalize a dividend plan, but internal discussions suggest the distribution of 20 to 30 percent of the company’s earnings as dividends to shareholders.
"In the next few years, we won't expect huge dividends. We would expect more of the profit to be retained to grow the institution," said Jonathan Gotianun, EastWest Bank chairman.
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