The Sy-led Banco de Oro Unibank Inc. (BDO), expects net profit to more than double to P5.5 billion this year, aided by loan growth.

BDO president Nestor Tan said the bank expects net interest income to rise by 38 percent to P32.77 billion, with loan growth "in the low teens."

"Moderate growth for loans and deposits will boost net income and fee-based income will remain strong," he said.

The banking arm of SM Investments Corp. posted a net income of P2.2 billion in 2008, down sharply from P6.5 billion in 2007, due to losses from its exposure to Lehman Brothers which filed for bankruptcy in September.

Acquisition binge

BDO's dramatic growth from a mid-sized bank in the early part of the decade is the result of its aggressive mergers and acquisitions amid Bangko Sentral ng Pilipinas' restrictions on local banks to increase branches. BDO increased its branch network by previously acquiring Dao Heng Bank, First e-Bank, Banco Santander, UOB Savings Bank, Mindanao Development Bank, and Ecology Bank.

However, it was its acquisition of Equitable-PCI Bank that propelled it to become the country's largest bank in terms of assets.

On Thursday, BDO announced a new deal: A merger with GE Money Bank, the Philippine banking unit of GE Capital, which in turn is the financial services unit of US-based conglomerate General Electric Co.

The transaction made BDO the latest owners of the once controversial Catholic church-controlled Monte de Piedad Savings Bank, which went bankrupt and closed in the late nineties. Monte de Piedad was later rehabilitated by the Keppel Group of Singapore in a deal brokered by the Bangko Sentral ng Pilipinas (BSP). In 2006, GE Capital bought Keppel Bank for over P1.4 billion.

GE Money's 31 branches, 30,000 customers, and 38 ATMs nationwide will be consolidated with BDO.

The GE Capital-Banco de Oro deal involves the former acquiring an initial 1.5 percent stake in BDO through the subscription of 35 million new shares. GE Capital has an option to increase its BDO holdings up to 10 percent.

GE Money Bank's net adjusted book value is approximately worth P1.5 billion, plus a premium for its franchise. The value will be fixed upon completion of the transaction by the third quarter of this year, subject to closing conditions and regulatory approval of the Bangko Sentral ng Pilipinas.

"We welcome the opportunity to be partners with an institution like General Electric. With GE's expertise in the financial sector, we hope this partnership will ultimately provide our customers with better consumer products and flexible financing solutions," said BDO chairperson Teresita Sy-Coson.

Upon completion of the transaction, BDO's asset base will be around P10 billion, loans at P6 billion, and deposits at P8.4 billion.

"BDO's superior market presence and clear strategy for growth will provide the business with the best opportunities for success. In addition, key customers and depositors will benefit from the best that both banks have to offer, with greater convenience and a wider range of products and services than ever before," said Mark Arnold, chief executive officer of GE Capital Global Banking in Southeast Asia.

BDO network

As of the first quarter this year, BDO ranked as the country's top bank in terms of total resources, trust assets, loans and deposits. It has a network of over 700 branch licenses and more than 1,200 ATMs.

BDO also has one of the largest distribution networks in the Philippines with an offshore branch located in Hong Kong and an overseas network of 21 remittance offices.

It is into retail banking, lending (corporate, commercial, consumer, and SME), treasury, trust, credit cards, corporate cash management and remittances.

On Friday, BDO closed 1.5 percent higher at P33 a piece.