MANILA - With government-sequestered United Coconut Planters Bank (UCPB) returning to profitability in the first half of 2009, the Philippine Deposit Insurance Corp. (PDIC) will try to sell its equity interest in the bank at a premium should the Supreme Court rule with finality on the bank ownership in favor of the government.

“Ideally we should be looking at cost recovery. But with the bank now making profits, of course we can get some premium,” PDIC president Jose Nograles told reporters.

In 2003 PDIC extended a P20-billion financial assistance to help rehabilitate UCPB, which suffered from heavy deposit withdrawals when the Supreme Court ruled that the coconut-levy funds used to put up the bank were public money.

Eight billion pesos of the loan from PDIC had been settled already while the balance of P12 billion had been converted into equity in the bank.

PDIC now occupies eight of the 15 board seats in UCPB. The Department of Finance has four seats while the Presidential Commission on Good Government has been given three seats.

But the sale of UCPB will have to wait until the Supreme Court makes its final ruling, Nograles pointed out.

“We need to resolve the ownership issue at the Supreme Court level. Nothing is going to happen until it makes its final decision,” he said. “But the minimum we should get [from the sale] is P12 billion.”

He said the bank is now moving to improve its operations and investing in information technology to upgrade its service.

UCPB posted a net income of P336 million for the first six months of 2009, recovering from losses in recent years following the completion of a P30-billion capital infusion by the government early this year.

The bank had attributed the sharp rise in fist-half revenue to P3.8 billion, from P2.1 billion a year earlier, to the hefty increases in deposits and loans.

Total deposits had risen 53%, or P42 billion, to P120.6 billion at the end of June from P78.7 billion a year ago. Government deposits accounted for P30 billion of the increase, while regular customer deposits accounted for the remaining P12 billion.

Increased deposits enabled the bank to lend aggressively, with its loan portfolio growing by nearly a third or P7.6 billion to P32.2 billion, from P24.6 billion a year earlier.

It grew both its commercial loans and consumer loans by 31 percent and 41 percent, respectively.

The bank invested the entire P30-billion government deposits in government securities, which more than tripled the bank’s trading and investment securities to P50 billion, from P16.4 billion last year.

The expansion of the bank’s securities and loan portfolios boosted its total assets to P148.6 billion, from P98.18 billion a year before.