For sale: Philippine Bank of Communications (PBCom)

James Ryan Jonas

Anyone interested to buy the Philippine Bank of Communications (PBCom)?

PBCom, a minor player in the Philippine banking industry, is again up for rebidding with the Macquarie Group already sending out invitations to other banks to submit a bid proposal.

The sale is part of the bank’s agreement with the Philippine Deposit Insurance Corporation (PDIC) to divest a majority of its shares following the bank’s rehabilitation in 2004 wherein the PDIC extended P7.6 billion worth of financial assistance to PBCom.

PBCom was given five years to make the sale. It ended in 2009 without a buyer, thus, the PDIC mandated PBCom instead to strengthen operations and maintain liquidity and profitability.

Financial Performance

As of December 2010, PBCom has revenues of P3.102 billion, slightly down from the P3.184 billion revenues booked in 2009.

Despite the decrease, the company’s net income stood at P377 million, up 269% from 2009. The jump was caused by higher trading and securities gains in 2010.

PBCom’s total assets in 2010 decreased slightly to P41.7 billion from P42.6 billion in 2009.

Total deposits also decreased, from P28.56 billion in 2009 to P27.61 billion in 2010.

The bank’s Non-Performing Loans (NPL) ratio — the percentage of loans in default compared to total loans — improved from 13.98% in 2009 to 9.25% in 2010.

A minor bank in the Philippines, PBCom does not even place in the Top 10 Largest Banks in the Philippines as of 2009.

Stock Performance

Data from the Philippine Stock Exchange (PSE) shows that there are 52.6 million outstanding shares of PBCom (Stock Code: PBC).

Rumor has it that key shareholders of the bank are willing to sell their shares at a minimum price of P25 per share.

With the stock currently trading at P40.50, the lower asking price by the owners could send the stock’s trading price sharply lower.

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.