{"id":312596,"date":"2022-03-16T13:20:58","date_gmt":"2022-03-16T05:20:58","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=312596"},"modified":"2023-01-08T15:45:27","modified_gmt":"2023-01-08T07:45:27","slug":"special-report-bncom-ipo-rcdc","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/special-report-bncom-ipo-rcdc\/","title":{"rendered":"Bank of Commerce (BNCOM) IPO: Is it a good buy?"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Also read these other Bank of Commerce IPO Special Reports!<\/h2>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-pinoyinvestor wp-block-embed-pinoyinvestor\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"HN0y4I1E6O\"><a href=\"https:\/\/www.pinoyinvestor.com\/smartinvestor\/special-report-bank-of-commerce-ipo-analysis\/\">Bank of Commerce (BNCOM) IPO Analysis<\/a><\/blockquote><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;Bank of Commerce (BNCOM) IPO Analysis&#8221; &#8212; PinoyInvestor\" src=\"https:\/\/www.pinoyinvestor.com\/smartinvestor\/special-report-bank-of-commerce-ipo-analysis\/embed\/#?secret=lyWNpwwMhl#?secret=HN0y4I1E6O\" data-secret=\"HN0y4I1E6O\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>The final offer price of BNCOM is set at P12.00 per share, offering a 4% discount to its maximum offer price of P12.50. At this price, the stock&#8217;s 2022 Price-to-Book (P\/B) value is 0.92x, relatively lower than the industry\u2019s three-year average of 1.08x.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>IPO Overview<\/strong><\/h2>\n\n\n\n<p>Bank of Commerce (BNCOM) is going public as part of its universal banking application. Having a unibank license would open more revenue streams for the bank, enabling it to carry a broader range of products from traditional working capital lines and term loans to project finance, IPOs, M&amp;As, financial advisory, and more. BNCOM is an affiliate of the Ang-led SMC. The conglomerate has an effective ownership of roughly 67.52% post-IPO on the bank.<\/p>\n\n\n\n<p>Amid the gradual restoration of consumer and business confidence, BNCOM saw its total deposits expand by +23.73% to P167.46 billion with CASA representing 90% of the total liabilities in 9M 2021. This would likely enable the bank to recognize higher NII and, likewise, NIMs, in the near future, assuming the CASA ratio wouldn\u2019t deviate much from its 9M 2021 footing.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Use of Proceeds<\/strong><\/h2>\n\n\n\n<p>The amount raised from the IPO will be used to fund the BNCOM\u2019s lending activities, CAPEX, and acquisition of investment securities. The biggest chunk, 54%, is going to be directed to increase BNCOM\u2019s loan portfolio, which is in line with its strategy of generating more interest income. About 28% will be used to fund the bank\u2019s CAPEX.<\/p>\n\n\n\n<p>Based on the prospectus, the budget will primarily be used to beef up BNCOM&#8217;s digital infrastructure, including the replacement of its old 273 ATM fleet and core banking system upgrades. Lastly, BNCOM intends to use the remaining 18% to acquire investment securities to meet regulatory liquidity requirements.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Profitability Highlights<\/strong><\/h2>\n\n\n\n<p>The pandemic has dented the banking industry as a whole, and BNCOM was of no exemption. At the onset of the pandemic, BNCOM\u2019s 2020 loan base contracted by -2.87% y\/y to P71.63 billion as it turned more cautious in extending credit to its clients. The bank also opted to front-load loan loss provisions of P962.51 million (from P52.10 million in 2019) in anticipation of asset quality deterioration in 2020.<\/p>\n\n\n\n<p>Amid the ongoing pandemic, BNCOM is aiming to have higher corporate loan exposure over consumer loans (auto, housing, and salary) as the latter has a more risks associated with it. The bank is also looking into tapping deeper into the mid-market segments to eventually replace the loans of its affiliates which are now subject to the scrutiny of the BSP following its universal banking license application. To do so, BNCOM is going to tap qualified third parties within SMC\u2019s ecosystem. In 9M 2021, Branch banking and Consumer Group accounted for 66.71% of BNCOM\u2019s NII, while Corporate Banking was responsible for 38.15%&#8211;reflecting a year-on-year increase of 822 bps. At this rate, we see the bank\u2019s NII mix to further lean closer to 60% corporate: 40% consumer moving forward.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Dividends<\/strong><\/h2>\n\n\n\n<p>BNCOM made no historic cash dividend declaration after its Traders Royal Bank (TRB) purchase in Nov 2001. The bank is still authorized to declare dividends, but subject to BSP\u2019s directive that it shall not do so until the balance of TRB misc. assets is fully provisioned.<\/p>\n\n\n\n<p>The bank&#8217;s ROEs, meanwhile, are projected to stay on an uptrend, even hitting the north of 8.00% in 2023, backed by our relatively bullish valuations. We believe that SMC\u2019s existing ecosystem, and the shift in the bank\u2019s focus to engaging more corporate loans are likely to buoy its profitability while keeping NPL at manageable levels.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>IPO Analysis Special Report<\/p>\n","protected":false},"author":12,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-312596","post","type-post","status-publish","format-standard","hentry","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/312596","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=312596"}],"version-history":[{"count":3,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/312596\/revisions"}],"predecessor-version":[{"id":320567,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/312596\/revisions\/320567"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=312596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=312596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=312596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}