EAST West Banking Corp., the 13th-largest lender by assets and the financial unit of the Filinvest Group, will increase its authorized capital stock from P20 billion to P50 billion to sustain growth momentum.
The bank said in a disclosure to the stock exchange the board approved the higher capital base in a special meeting Friday.
It said the increase would consist of “4,500,000,000 common shares with par value of P10.00 per share or a total par value of P45 billion and 500,000,000 preferred shares with par value of P10.00 per share or a total par value of P5 billion.”
“We have fully issued our existing authorized common stock. Our CET-1 ratio as last reported is around 10 percent and EW is growing fast,” bank chairman Antonio Moncupa Jr. said in a text message.
“To sustain the growth momentum, it is pretty obvious that we need to raise capital. Although nothing is certain at this time if we will do a stock rights (offering)…,” Moncupa said.
EastWest posted a 54-percent jump in net income in the first quarter to P1.2 billion year-on-year driven by robust loan growth and improving productivity.
Moncupa said with the strong performance in the first three months, a 25-percent increase in net income for the whole year could be possible. He said a steady increase in productivity could be expected after the bank completed its expansion and as its “stores” or branches matured.
“We expect revenue growth to continue besting increases in costs. At the rate we are going, a 25-percent increase in income this year to around P4.25 billion is doable,” Moncupa said earlier.
The board also approved Friday the declaration of stock dividends equivalent to P7.5 billion from the corporation’s unrestricted retained earnings as of Dec. 31, 2016.
“This represents the minimum 25 percent subscribed and paid-up capital from the increase in capital stock of the corporation. Record date for the stock dividends shall be fixed by the Securities and Exchange Commission,” the bank said.
The bank will also increase the members of its board of directors from nine to 11 in to enhance the board’s effectiveness in conducting business. These matters will be endorsed for approval of the stockholders in due time, it said.
Meanwhile, Moncupa declined to comment on earlier reports saying East West was planning to sell a 20-percent stake to foreign lenders, saying this was just “speculative” statements with no basis at all.
“… I cannot comment on any speculative statement. I don’t know where this story is coming from,” Moncupa said in a text message.
An earlier report from Bloomberg in May 2017 said East West was working with an adviser to sell about a 20-percent stake to a foreign bank.
Since the domestic banking industry was further liberalized in June 2014, some local banks tied up with foreign lenders through stock sale in their bid to comply with the regulator’s higher capital requirements and to fund loan growth.
Security Bank Corp., the fifth-largest local bank in terms of assets, for instance, sold P37 billion worth of stake in 2016 to Japan’s biggest bank Mitsubishi UFJ Financial Group Inc. It is considered the biggest investment so far by a foreign financial institution in the country.