Awards: competition heats up in The Philippines

We continue presenting the rationale for our country awards with the winners from The Philippines.

Following our awards ceremony on June 27, we bring you the in-depth reasoning behind the winners from The Philippines.

BEST BANK, BEST PRIVATE BANK: BDO UNIBANK

BDO Unibank retained its status as the best bank in our view in the Philippines this year, reporting record earnings driven by strong performances across its core businesses.

The bank reported an all-time high net income of P28.1 billion ($529 million), a year-on-year increase of 7%, with net interest income leaping 25% to P81.8 billion ($1.54 billion) on the back of double-digit loan and deposit growth.

Led by fee-based income and insurance premiums, non-interest income amounted to P47.2 billion ($888 million), up from P30.3 billion ($570) in 2016. In challenging market conditions the bank saw a decline of 20% in trading and foreign exchange gains to P3.9 billion ($7.34 million) from 2016.

Following its rights issue in January 2017, BDO Unibank embarked on record-breaking fund-raising activities during the review period. In August it issued $700 million in fixed-rate senior notes to secure long-term funding for the bank’s lending operations, which it followed up in September by issuing P11.8 billion ($222 million) of long-term negotiable certificates of deposits to diversify its funding sources and support its expansion plans.

BDO Unibank continued to expand its physical presence in the Philippines, growing its domestic network to removed the 1,179 branches, up from 1,100 the previous year. This includes five new One Network Bank branches, further deepening the bank’s coverage in rural areas of the Philippines.

Looking ahead, the bank conducted a successful pilot tests for MSMEs (micro, small and medium-sized businesses) in an initial six regions, with plans to scale up the platform nationally to boost coverage of this underserved segment of the market.

BDO Private Bank remains the only onshore private banking-focused institution in the Philippines that offers comparable services to offshore private banks. During the review period, assets under management increased from P357.90 billion to P392.60 billion, supported by eight customer lounges in Manila, Cebu and Davao.

BEST INVESTMENT BANK, ECM HOUSE: BPI CAPITAL

Leveraging off parent Bank of the Philippine Islands, or BPI, BPI Capital has access to a broad spectrum of clients, including institutional, corporate, high net worth and retail customers, backed by a team of 60 experts and professionals.

It was the market leader in ECM activity during the review period with four IPOs, raising some P26.95 billion in the process.

That includes serving as sole issue manager, sole bookrunner and joint lead underwriter in Cirtek Holdings’ $67 million preferred share issuance; it was the first time a domestic corporation had issued US dollar-denominated shares in the Philippines.

The bank also acted as sole issue manager, bookrunner and underwriter in Robinsons Land Corporation’s P20.2 billion rights offer in February, which was undertaken in quick time before a scheduled cut-off period.

In DCM, BPI Capital played major roles in several high-profile deals, including the Philippines government’s two retail treasury bonds in April and December totalling P436.4 billion ($8.2 billion) and Petron Capital’s $500 million perpetual bond in January.

In project finance, BPI Capital acted as joint mandated lead arranger and joint bookrunner in GNPower Dinginin’s P22billion project finance facility in December and AtimonanOne Energy’s P107.5 billion project finance facility in September.

BEST DCM HOUSE: CHINA BANK CAPITAL

China Bank Capital rose to be the leading domestic debt capital markets house in the Philippines during the review period, raising over P32 billion ($660 million) through 16 issues and garnering a near-16% market share.

Displaying great innovation, it successfully marketed a new debt capital instrument in the Philippines, directly addressing the needs of both issuers and investors.

As a result of regulatory changes by the country’s central bank, China Bank Capital introduced Short Dated Notes (SDN) to the market. The two SDNs for Ayala Land, totalling P7.4 billion, provided market funds and qualified investors with a short-term yield pick-up in a blue-chip credit that typically prefers issuing debt instruments maturing in five years or more. For the issuer, the deals helped to address its short-term funding requirements outside of traditional banking instruments.

The SDNs were the first securities enrolled onto Philippine Dealing Exchange Corp’s fixed income board for qualified buyers, enabling them to be marked-to market so local Unit Investment Trust Funds (UITFs) could hold them.

In addition, China Bank Capital brought 8990 Holdings to market with a P5 billion preferred share offering, which received strong backing in the market and was oversubscribed 1.5 times.

BEST BROKERAGE: FIRST METRO SECURITIES

Established over thirty years ago, First Metro Securities has grown into one of the largest and fastest growing online brokerages in the Philippines.

Supported by First Metro Investment Corporation and the Metrobank Group, First Metro Securities is the only licensed market maker and an authorised dealer participant in the country’s first and only exchange-traded fund, the First Metro Philippine Equity ETF, which tracks the performance of the Philippines Stock Exchange.

In 2017, First Metro Securities acted for over 30,000 clients, with a 60/40 split between institutional and retail investors.

Trading volumes were up by 11% during the review period, to P144 billion and they achieved a record income of P96 million up 76% from 2016.

First Metro invested heavily in 2017 in investor education, organising over 160 seminars and webinars. It has since hosted over 80 seminars in the first quarter of 2018 and plans to continue expanding its investor education efforts over the rest of the year.

In research, First Metro analysts offer daily, weekly, monthly and annual reports, which are co-branded with DBS Vickers Securities and distributed in regional markets serviced by DBS.

BEST FOREIGN BANK: CITI

Tracing its history in the Philippines back to 1902, Citi has further strengthened its deep roots in the country during the award period. Headcount during 2017 increased to more than 8,000 with 6,000 employees now housed within its new Citi Plaza office in Bonifacio Global City.

In corporate and investment banking, Citi acted as sole arranger on the inaugural $45 million one-year loan syndication of HC Consumer Finance Philippines Inc. (Home Credit) in September, bringing local banks and international banks together through its international network. In January the bank served as joint lead manager and bookrunner, securities trustee, principal paying agent and transfer agent on a marquee offering by International Container Terminal Services Inc. of $400 million-worth of fixed-for-life perpetual securities with equity accounting. This was the first equity accounted (this is actually a debt instrument, but it is treated in accounting terms as an equity instrument on the balance sheet to keep debt/equity ratios in line) fixed-for-life offering structure issued by a company outside of Greater China.

In cash management and trade services, Citi processes over four million payments and collection transactions from multinational, top-tier local corporates and financial institutions annually. It remained the largest foreign bank for tax collections.

Citi has pushed digitisation in transaction banking. For customers, this has meant faster and less complicated procedures, removing much of the paperwork with digital forms and procedures.

Citi Philippines ended 2017 with $2.2Bn in customer loans, representing a growth of 25% on the prior year. Strong growth was evident in both the credit card and personal lending portfolio as well as growth to support Citi’s corporate clients.

More than half of Citi’s consumer bank customers are digitally enrolled, with mobile being the fastest growing channel. Mobile use among Citi Philippines customers has surged by 71% in the last 12 months.

BEST FOREIGN INVESTMENT BANK: UBS

UBS led from the front once again during the review period and was involved in a broad range of interesting deals, making it a deserving winner in this category.

UBS acted as exclusive financial advisor to GT Capital in its acquisition of a 9.6% stake in Metropolitan Bank and Trust Company (MBTC), increasing its stake to 36.09%. This is the 16th transaction that UBS has led for Ty-family entities (MBTC and GTCAP) since 2002; it has completed 16 out of 17 transactions over this period (14 on a sole lead basis).

It was also the buy-side advisor to Caltex Australia on it’s A$115million ($85.5 million) acquisition of a 20% equity stake in Seaoil Philippines, and in January it advised on the sale of SIAL CVS, Family Mart and Itochu Corp of Family Mart Philippines to Phoenix Petroleum Philippines.

In equity markets, UBS was the sole bookrunner for Ayala Corporation’s $153 million accelerated secondary sell-down of shares by Mitsubishi Corporation. Due to exceptional demand, the deal was upsized from $110 million after the book was covered in under one hour. In June, UBS it was sole bookrunner too for Metro Pacific Investments Corporation's $256 million accelerated secondary sell-down of shares in Meralco, the largest placement since January 2015. Anchor investors took 85% of the allocation, with Asian investors taking 87% of the total.

In debt capital markets, UBS acted on three of the larger deals during the review period. In January, UBS acted as joint bookrunner for Petron Corp’s $500 million senior perpetual non-call 5.5 year bond. The issue was oversubscribed by a factor of three, enabling pricing to be tightened from 5% to 4.7%.

Also in January, UBS acted as a joint lead manager and joint bookrunner on the Republic of the Philippines’ $2 billion 10-year global bond offering. Due to strong investor demand, the government was able to get the lowest coupon rate ever at 3%, eclipsing the 3.7% achieved in 2017 for a 25-year bond.

In March the bank was joint bookrunner on Rizal Commercial Banking Corp's $300 million Reg-S senior bond offering. Institutional participation was strong with 64% allocated to fund managers, 13% to private banks, 12% to insurance/SWFs and 11% to banks.

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