The Bangko Sentral ng Pilipinas (BSP) has approved the request of East West Banking Corp. to exercise a call option on P1.5 billion worth of notes on January 2, 2016, to comply with capital requirements and roll out investment plans.
A call option gives the holder the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific date.
The Monetary Board has approved the redemption of the bank’s non-Basel 3 compliant Lower Tier-2 notes, issued on July 2, 2010. The unsecured subordinated notes with par value of P1.50 billion and a coupon rate of 7.50 percent has an original maturity date of January 2, 2021.
“The exercise of the call option is subject to the bank’s compliance with the requirements under the Manual of Regulations for Banks,” according to Senior Financial analyst Aerol Paul B. Banal.
In a separate disclosure, East West Bank said its loan portfolio level has increased to P133.6 billion as of the third quarter, 12.3 percent higher than its P118.9-billion loan portfolio in April 2015.
The increase in loan portfolio was partly attributed to the additional funds that came from the proceeds of its stock-rights offer (SRO).
The bank said a portion of the proceeds from the P8-billion SRO, which was placed in investments allowed by BSP regulations, has been reinvested and disbursed as loans.
The bank reported a P1.008-billion net income in the first half of the year, 4 percent lower than its P1.047-billion net income in June 2014.
Total assets reached P204.9 billion in the first half, 31 percent higher than last year’s P155.9 billion.
The growth in assets was propelled by the 23-percent expansion in loans to P131 billion as of June. Total deposits grew by 25 percent to P158.1 billion from P126.1 billion a year ago.
Consumer loans increased 31 percent to P74.7 billion from P56.8 billion, driven by a 57-percent growth in auto loans. On the other hand, corporate loans grew 14 percent to P56.3 billion.
East West has a total of 359 branches, with 164 of these branches in the restricted areas and a total of 205 of these branches in all of Metro Manila, as of June 30, 2015. It has an automated teller machine (ATM) network of 549, composed of 352 on-site ATMs and 197 off-site ATMs.