BDO Unibank and its rural banking arm BDO Network Bank (BDONB) are beefing up their respective capital through a stock dividend and the issuance of new primary shares, respectively.
In a disclosure to the Philippine Stock Exchange, BDO said it is declaring a 20 percent stock dividend as well as planning an increase in its authorized capital stock to 8.5 billion shares from the current 5.5 billion shares.
The bank said its Board of Directors has approved the declaration of stock dividends equivalent to 20 percent of the Bank’s outstanding capital stock as well as the planned capital increase and the amendment to the Bank’s Articles of Incorporation to reflect the increase.
On the other hand, BDO is planning to increase the capital position of BDONB by up to P2.0 billion, to be funded through the issuance of primary common shares.
BDONB’s major shareholders, BDO, with an 85 percent stake, and Osmanthus Investment Holdings Pte. Ltd, with a 15 percent stake, have committed to participate in the capital-raising activity up to their proportionate shares.
The capital plan will be implemented through periodic subscriptions of primary common shares up to P2.0 billion. The capital-raising plan will be subject to regulatory approvals.
BDO said the stock dividend and increase in authorized capital will be presented and endorsed for approval to stockholders at the Bank’s Annual Shareholders’ Meeting to be held virtually on April 22, 2022.
“The stock dividend declaration is a testament to BDO’s commitment to continue investing in the business and provide consistent, steady returns and value to its shareholders,” BDO said.
It explained that, “Shareholders will gain additional shares which they can keep for the long-haul and grow in value, or in case they need liquidity, sell through the stock market at their discretion.” Record and payment dates of the stock dividends shall be fixed and disclosed after approval by the Bangko Sentral ng Pilipinas, within the periods provided by law.
Meanwhile, the increase in the Bank’s authorized capital stock provides the Bank flexibility to increase its capital during periods of rapid organic growth or in the event of inorganic opportunities.
This will allow BDO to continue to expand its business, strengthen its franchise, and deliver quality earnings to position the Bank for long-term sustainable growth.
The Bank’s ability to expand its business is dependent on business conditions and the Bank’s financial position.
BDO said the BDONB capital increase will allow the unit to support the sustained expansion in its salary loan and micro small & medium enterprises (MSME) portfolios, which have a compounded annual growth rate (CAGR) of 28 percent over the last 3 years to P37 billion.
Further, this will enhance BDONB’s ability to cover and serve more markets, particularly the unbanked and the underserved segments of the population.
“While BDONB has experienced strong growth in recent years, there is no guaranty that BDONB will be able to continue with a similar growth trajectory,” said BDO.
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