PSBank Exercises Call Option on PhP2B Tier-2 Notes

Philippine Savings Bank (PSBank, PSE: PSB), the thrift banking arm of the Metrobank Group (PSE: MBT), exercised its call option on its PhP2 billion Unsecured Subordinate Notes on January 28, 2011. The Notes, issued January 27, 2006, had an original maturity of 10 years, but with an option to call the issue after five years.

Up to the time the call option was exercised, the Notes were rated PRS Aaa by the Philippine Rating Services Corp. (PhilRatings). An issue credit of PRS Aaa considers “obligations to be of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.” PRS Aaa is the highest rating assigned by PhilRatings. With full payment of the Unsecured Subordinate Notes, PSBank’s issue credit rating will now be removed from PhilRatings’ official list of outstanding credit ratings.

PSBank’s early redemption of the Notes is not seen to have a material impact on its capital adequacy ratio (CAR). With its exercise of the call option, PSBank expects a CAR of about 13%, still exceeding the regulatory minimum CAR of¬†10% for banks. PSBank had a CAR of 15.37% as at end-2010. The bank reported a 2010 audited net income of PhP1.8 billion, up from PhP1.2 billion in the previous year. The increase in net income is supported by a 12% year-on-year growth in bank assets to PhP104.1 billion as at end-2010. Of this amount, gross loans expanded by 15% to PhP55.6 billion, with auto loans rising by 27%; morgage loans, 11%; and personal loans, 9%. Deposits grew 13% to PhP87.5 billion.

PSBank ended 2010 with a network of 180 branches and 380 automated teller machines (ATMs) nationwide. Branch and ATM expansion will continue, with the bank planning to open 15 new branches and to add 70 offsite  ATMs in 2011. PSBank expects its net income to reach PhP2 billion this year.

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